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SEC Filings
10-Q
NUSTAR ENERGY L.P. filed this Form 10-Q on 05/15/2002
Entire Document
 
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During  the  three  months  ended  March  31,  2002,  the  Partnership  incurred
$1,009,000 of expansion  capital  expenditures,  which related  primarily to the
Amarillo to Albuquerque refined product pipeline expansion project.  The capital
expenditures for the Amarillo to Albuquerque  refined product pipeline expansion
project  are net of  Phillips  Petroleum  Company's  50%  share of  costs.  Upon
completion  in January  2002,  the  Partnership's  capacity  in the  Amarillo to
Albuquerque pipeline increased from 16,083 barrels per day to 20,750 barrels per
day.

In May 2002, the  Partnership  expects to complete the  acquisition of a 25-mile
crude  hydrogen  pipeline  from  Praxair,  Inc. The pipeline  originates  at the
Celanese  Chemical  facility  in Clear Lake,  Texas and runs to Valero  Energy's
Texas City  refinery in Texas  City,  Texas.  The  pipeline  will  supply  crude
hydrogen to the refinery  under a long-term  supply  arrangement  between Valero
Energy  and  Praxair,  Inc.  The total  cost of the  pipeline  is  estimated  at
$11,000,000 and is expected to generate annual adjusted EBITDA of $1,300,000.

The Partnership  anticipates that it will continue to have adequate liquidity to
fund future  recurring  operating,  investing  and  financing  activities.  Cash
distributions are expected to be funded with internally generated cash.


I
tem 3.  Quantitative and Qualitative Disclosures About Market Risk

The  Partnership  currently does not engage in interest rate,  foreign  currency
exchange rate or commodity price hedging transactions.

The principal  market risk (i.e.,  the risk of loss arising from adverse changes
in market rates and prices) to which the Partnership is exposed is interest rate
risk on its debt. The Partnership manages its debt considering various financing
alternatives  available in the market.  Borrowings  under the  revolving  credit
facility do not give rise to significant interest rate risk because the interest
rate on borrowings under the facility float with market rates. Thus the carrying
amount  of  outstanding   borrowings   under  the  revolving   credit   facility
approximates fair value.

The  Partnership's  remaining  debt is fixed rate debt with an 8% interest rate.
The  estimated  fair  value of the  fixed  rate  debt as of March  31,  2002 was
$10,300,000 as compared to the carrying value of $10,076,000. The fair value was
estimated  using  discounted  cash flow analysis,  based on current  incremental
borrowing rates for similar types of borrowing arrangements.  Since the total of
this fixed rate debt is not material to the Partnership's  financial position or
performance, there is currently minimal exposure to market interest rate risk.


PART II - OTHER INFORMATION


Item 1. Legal Proceedings

No material  litigation has been filed or is pending  against the Partnership as
of March 31, 2002.


Item 2.  Changes in Securities and Use of Proceeds

None.


Item 3. Defaults Upon Senior Securities

None.


Item 4.  Submission of Matters to a Vote of Security Holders

None.


Item 5.  Other Information

None.

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