PHILADELPHIA ENERGY SOLUTIONS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in thousands, except unit and volume data)
On May 8, 2014, in connection with the summer butane agreement, Refining entered into a sale and repurchase agreement with SXL pursuant to
which Refining agreed to sell, and SXL agreed to purchase, a minimum of 150,000 barrels of butane (up to a maximum of 200,000 barrels of butane) during the period between May 1, 2014 and August 1, 2014. The agreement also required Refining to
repurchase equal volumes of butane from SXL during the period from September 16, 2014 through October 31, 2014. The parties agreed to a fixed price for the butane under this agreement.
Expenses incurred in connection with the Marcus Hook Terminal agreements were $5,530, $17,847, and $8,353 for the years ended December 31,
2015, 2014, and 2013, respectively. These expenses are recorded as a component of cost of sales in the consolidated statements of operations and comprehensive income (loss).
Inter-refinery Pipeline Lease
connection with the acquisition of the Philadelphia refining complex, on September 8, 2012, Sunoco R&M assigned to Refining its rights to and obligations under a lease for three pipelines owned by SXL that connect the Philadelphia refining
complex to the Marcus Hook Terminal (Inter-refinery pipeline). On November 30, 2012, Refining entered into a lease with SXL for the Inter-refinery pipeline, which replaced the Sunoco R&M lease. Under the lease, Refining pays SXL rent and a
per barrel throughput fee to provide power to pumps at the Marcus Hook Terminal. Rental payments are subject to an annual escalator. The lease expires in January 2022. Fees incurred in connection with this agreement were $7,334, $6,816, and $6,711
for the years ended December 31, 2015, 2014, and 2013, respectively. These fees are recorded as a component of cost of sales in the consolidated statements of operations and comprehensive income (loss).
SXL is responsible for operating and maintaining the pipelines and related facilities, except Refining must reimburse SXL for any non-routine
maintenance expenditures incurred during the term of the agreement. There were no material reimbursements under this agreement for the years ended December 31, 2015, 2014 and 2013.
Wholesale Rack Terminal Services Agreements
Refining has entered into several terminal services agreements with SXL pursuant to which SXL provides terminaling and storage services for
Refining at certain of its wholesale rack terminals.
Products Terminal Services Agreement (Belmont Rack and Paulsboro Terminal)
On September 8, 2012, Refining entered into an agreement with SXL pursuant to which SXL provides terminaling and storage services for
Refining at the Belmont Rack and Paulsboro terminal. In exchange, Refining pays SXL a per gallon throughput fee for each refined product, a per gallon demurrage fee, and various additive fees, all of which are subject to an annual CPI-based
inflation escalator. The contract expires in September 2022, and any obligations under the agreement will be suspended to the extent affected by a force majeure event.
In addition, Refining has a right of first offer to purchase the Belmont Rack should SXL sell the Belmont Rack or any material portion
thereof. Refining also has the option to purchase the Belmont Rack should Refining sell the Philadelphia refining complex, undergo an initial public offering or restructure its capital structure through a public debt financing of not less than $200
million. SXL has a right of first refusal to repurchase the Belmont Rack should Refining purchase the Belmont Rack pursuant to its option and thereafter sell or contribute