Colonial Pipeline Company - AGG Facilitates Complicated Deal


Based in Alpharetta, Georgia, Colonial Pipeline controls more than 5,500 miles of underground pipe and above ground storage tanks and pump stations. The company transports on a daily basis more than 100 million gallons of fuel, most of which originates in the Gulf of Mexico region. To enhance its services, Colonial sought to purchase Shell Pipeline Company’s interest in the Port Arthur Products Station and Shell Ex Facility, known as PAPS. Shell’s interest in PAPS consisted of a portion of the facilities owned wholly by Shell and another portion owed jointly with Valero Energy Corp. The company called on its longtime legal counsel, Arnall Golden Gregory, to facilitate the complicated deal.


Shell sought bids for its interest in PAPS and Colonial was finally chosen as the exclusive party with which to negotiate the purchase. Andrew Schutt, a partner in the Corporate and Securities Practice, handled negotiation of the purchase agreement and served as the AGG team leader for the other aspects of the transaction, including the transition from Shell to Colonial as operator of PAPS following closing. The deal included bringing aboard new employees, so assistance by AGG’s Employment Practice, lead by Henry Perlowski, was required. David McAlister, a partner in the Real Estate Practice, advised on purchasing the large amount of real estate included in Shell’s interest. The transaction also involved an operations agreement, handled by Joe Gotch, a partner in the Corporate and Securities Practice, pursuant to which Colonial serves as operator of the entire PAPS facility, including the jointly owned assets. John Spinrad, leader of the Environmental Practice, addressed environmental matters. Sherman Cohen, chair of the Corporate and Securities Practice, addressed Federal Trade Commission compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which is triggered when a deal reaches a certain size.


After 11 months of work, Colonial closed on the purchase. PAPS provides a gateway to the Colonial and Explorer pipelines for local refiners and adds 3.2 million barrels of tankage to Colonial’s system. It also offers the potential for Colonial to provide new services for refiners and shippers. On the day of the closing, a Colonial executive emailed Arnall Golden Gregory: “There are many ways to describe this transaction but, for the purposes of this note, I will choose ‘epic,’” he wrote. “That it reached a satisfactory ending is in large part a result of your hard work and dedication. Your consistently wise counsel was invaluable and in keeping with the type of representation AGG has provided to Colonial over the years. Thank you!!”