Phillips 66 (NYSE: PSX) will drop down two crude oil rail facilities and pipeline assets to its MLP, Phillips 66 Partners LP (NYSE: PSXP), for $340 million, the company said Oct. 22.

The dropdown acquisition includes two newly constructed crude oil rail-unloading facilities located in Linden, N.J., and Ferndale, Wash., and certain assets associated with the Cross-Channel Connector Pipeline.

“The acquisition of these high-quality logistics assets will enhance both the composition and geographic diversity of the partnership’s portfolio,” said Greg Garland, Phillips 66 Partners chairman and CEO, in a statement. “These strategically positioned assets will allow us to deliver on our plans for achieving top-quartile distribution growth.”

The assets to be acquired include:

  • The Bayway Rail-unloading Facility located within the Phillips 66 Bayway Refinery. The facility started commercial operations in August and is capable of unloading 120 railcars simultaneously, with a crude-unloading capacity of 75,000 barrels per day (bbl/d).
  • The Ferndale Rail-unloading Facility located adjacent to the Phillips 66 Ferndale Refinery. The facility is scheduled to begin commercial operations in November and will be capable of unloading 54 railcars simultaneously with a crude-unloading capacity of 30,000 bbl/d.
  • The Cross-Channel Connector Pipeline assets consisting of an active 2.5-mile, 20-inch diameter refined products pipeline, as well as an idled, 2.6-mile, 20-inch diameter refined products pipeline that runs under the Houston Ship Channel. The active segment currently transports refined products between the partnership’s Pasadena Terminal and Kinder Morgan’s (NYSE: KMI) Pasadena Terminal.

The partnership will finance the acquisition with borrowings under its revolving credit facility, assumption of a five-year note and the issuance to Phillips 66 of common and general partner units.

The acquisition, which is anticipated to close in early December, is expected to be immediately accretive to unitholders.