Q3 2021 NuStar Energy LP Earnings Call
Okay.
Good morning, and thank you first lien by welcome to the Q3 2021 they start energy L. P earnings conference call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press Star then zero on your Touchtone telephone I would now like to turn the conference over to your host Pam Schmidt.
Vice President of Investor Relations. Please go ahead.
Good morning, and welcome to today's call.
On the call today are new start energy L. P 's, President and CEO, Brad Barron Executive Vice President and CFO, Tom Shoaf, along with other members of our management team.
Where we get started we would like to remind you that during the course of this call. Mr Management will make statements about our current views concerning the future performance of Neustar that are forward looking statements.
These statements are subject to the various risks uncertainties and assumptions described in our filings with the Securities and Exchange Commission actuals.
Actual results may differ materially from those described in the forward looking statements.
During the course of this call. We will also refer to certain non-GAAP financial measures.
These non-GAAP financial measures should not be considered as alternatives to GAAP measures reconciliations of certain of these non-GAAP financial measures to U S. GAAP, maybe found in our earnings press release with additional reconciliations located on the financials page of the investors section of our website at Neustar energy Dot com.
With that I will turn the call over to Brad.
Good morning. Thank you all for taking the time to join us today.
We have a lot of positive news for you today on our successful closing on the sale of Eastern U S terminal package.
Our solid results for the third quarter and also our expectations for full year 2021.
Starting with the sale in October we announced that we closed on our $250 million sale of the Eastern U S terminal facilities to Sunoco L. P.
As promised for deploying those sales proceeds to lower leverage and we now expect our year end debt to EBITDA metric to be below four times.
We also can do you expect to self fund all of our spending from our internally generated cash flows in 2021 and beyond.
With the sale we've taken another important step in executing on our plan to optimize our business and strengthen our balance sheet.
In order to focus 100% of our resources on our core asset footprint, including our fund products assets, our crude assets, which include our Permian Corpus Christi systems in St James facility.
Our west Coast renewable logistics network and our ammonia system.
Now I'll turn to some highlights of our third quarter results.
This quarter, we once again delivered solid results under challenging conditions and demonstrated the strength and resilience of our assets.
As we generated adjusted EBITDA for the third quarter.
Comparable to <unk> 2020.
5% of our pre pandemic <unk> 2019.
Well as DCF of 10% over <unk> 2020 adjusted DCF.
Starting with our front end products in the third quarter, we continued to see solid steady refined product demand in the markets, we serve maintaining a strong 105% pre pandemic demand on pace with second quarter of this year.
Our third quarter refined product throughput were up 16% over <unk> 2020.
And up 8% over <unk> 2019.
We continue to expect our refined product systems to perform at or above 100% of our pre pandemic run rate for the remainder of 2021.
Steady recovery in front of product demand has also continued to rebound in U S refiners demand for crude which has contributed to higher throughput.
For our crude pipelines in the third quarter up 11%.
Over <unk> 'twenty one.
<unk> 2020.
Rebound in crude demand in the U S and abroad has in turn driven higher than forecasted global crude prices, which is lifted U S shale production, primarily in the Permian basin.
Once again to our Permian crude systems core of the core premier location lowest producer costs and highest product quality, we've seen strong volume improvement there.
We're happy to report that in the third quarter, our Permian systems volumes grew to a record breaking average of 502000 barrels per day, that's up 12% over <unk>. This year up 19% over <unk> last year and up 11% over the peak pre Covid quarterly average which occurred in the first quarter of 2020.
In October our Permian volumes continued to rebound ahead of the rest of the Permian basin and increased to an average of 512000 barrels a day.
We're now forecasting we will exit 2021 at around 514000 barrels per day, which is up from the 500000 barrels a day, we forecasted in the second quarter.
Looking back to the beginning of this year, we're even more encouraged by the fact that our Permian system is up an impressive 9% from the 470000 barrels per day, we expected back in February.
We still forecast the Eagle Ford and <unk> volumes at our Corpus Christi crude system at our MVC levels for the rest of the year, but we've seen modest incremental improvement in recent months.
<unk> long haul barrels from the Permian, which we hope is early indication of future improvement with rising global demand.
Improving global demand combined with sustained healthy U S shale production growth should increase U S crude exports overtime, we should also improve volumes.
Our corpus Christi crude system as well as at our St. James Terminal.
We also expect to begin benefiting from inbound barrels from reversal of cap line starting in 2022.
Turning to our renewable fuel system on the West coast.
As we've discussed in prior quarters.
Through our West coast renewable fuels network Neustar plays an integral role in facilitating a low carbon renewable fuels significantly reduce emissions from transportation.
You start currently handles an impressive share of California renewable fuels.
According to the latest available data from the state of California.
For the second quarter of 2021, new store handled about 7% of California's total biodiesel volumes.
Over 20% California's ethanol close to 30% of the <unk>.
Renewable diesel volumes.
Instead it doesn't yet include the growing proportion of renewable jet.
Handling the region, which is substantial.
We expect new start leadership and the low carbon fuel transition in California and across the West coast to Canadian grow as we complete our planned tank conversion projects there.
We plan to continue to develop projects to expand our knowable fuels logistics services at low carbon fuel legislative mandates proliferate and customer demand increases.
Turning to ammonia.
Throughput in our ammonia system was up 39% compared to the same quarter last year as we touched on last quarter, we're working to increase our systems utilization, even more through low spend high return projects to connect and extend our system in new and current customers.
These projects would supply ammonia for current applications like the fertilizer that augments use food production as well as corn for ethanol production across the Midwest.
And we're looking to ammonia future as well.
Ammonia for existing applications and for exciting opportunities like renewable electricity generation and safe efficient transportation for hydrogen to power fuel cell vehicles.
We look forward to being able to provide more details on.
These projects increase our ammonia systems utilization and profitability in the short and longer term at multiple locations on our system spans 2000 miles from Louisiana up to and across the mid continent.
I'm proud of the part.
New store place a day and transporting traditional ammonia to support our nation's food in ethanol production. We're also excited about new start developing role in the future of ammonia and hydrogen.
So we're pleased with the strong results that our business generated in the third quarter.
As the world's continue to bounce back from the lingering impact of the pandemic and we are expecting our full year 2021 results to demonstrate once again, the strength and resilience of our assets our employees and our business with that I'll turn it over to Tom to.
To give you more details on <unk> results and outlook.
Thanks, Brad and good morning, everyone before I get started I want to note that our third quarter 2021 results include a $130 million noncash.
Noncash charge related to the sale of our eastern U S terminal operations and $59 million noncash impairment charge on a portion of our Houston 12 inch pipeline as well as a $9 million gain from our insurance proceeds to rebuild tanks that are <unk> terminal and the results. We are presenting today are adjusted to exclude.
Those items.
Brad mentioned, our third quarter 2021 results demonstrate the strength of our assets even as global demand continues to rebound from 2020 pandemic lows.
Our DCF available to common limited partners was $92 million in the third quarter up $8 million or 10% compared to the third quarter 2000, Twenty's adjusted DCF of $84 million and our.
Distribution coverage ratio to the common limited partners was two one times.
This quarter, we generated adjusted EBITDA of $177 million, which is comparable to the third quarter 2020 results.
Turning now to our segments third.
<unk> third quarter 2021, adjusted EBITDA in our pipeline segment was $145 million up $16 million or 12% compared to $129 million in the third quarter of 2020.
We saw sustained solid rebound in our pipeline segment throughput volumes compared to <unk> 2021, <unk> 2020, and pre Covid <unk> 2019.
Our third quarter 2021, adjusted EBITDA in our storage segment was $59 million down $15 million compared to EBITDA of $74 million in the third quarter of 2020, driven by the roll off of 2020 contango contracts at point, Tupper, and Piney point as well as from customer transitions tank maintenance.
Since in preparation for Hurricane Ida, mainly at St James and point tougher.
At the end of the third quarter 2021, our debt balance was $3 4 billion and we had over $900 million available on our $1 billion revolving credit facility.
We ended the third quarter with debt to EBITDA ratio of four one times, which we expect to improve through the end of the year.
Turning to our full year 2021 projections taking into account the eastern U S terminal sale, we expect <unk> 2021, adjusted EBITDA to be in the range of 685 $715 million slightly higher than the previous expectations and as Brad noted we continue to expect self fund all of our 2002.
One spending from internally generated cash flows.
Moving to strategic capital, we plan to spend $140 million to $160 million in 2021.
Of our total 2021 strategic spending approximately 100, sorry, approximately $35 million is for Permian system and around $50 million for our west coast renewable fuels network.
In addition, we continue to expect to spend $35 million to $45 million on reliability capital spending in 2021.
Just on these projections, we expect our debt to EBITDA ratio at the end of 2021 to be below four times.
And we will be achieving these solid results, while generating internal cash flows to meet all of our spending needs and with that I'll turn the call back over to Brad. Thanks.
Thanks, Tom.
The recovery in the global economy, along with strong energy prices has been encouraging signs for 2022.
Once again this past quarter, we continued to deliver on our commitment to all of our stakeholders.
We generated.
<unk> strengthened our balance sheet, we're generating strong results for developing and executing on low multiple organic growth projects for both traditional and renewable fuels across our footprint.
We are funding all of our spending from our internally generated cash flows.
And we're operating operating sustainably or protecting our employees our communities and the environment.
You will see in our recently posted a sustainability report, which augments. The presentation were released in July that our record demonstrates our commitment to sustainability.
We're proud of the work, we do we're committed to doing it well.
Through employees' hard work Neustar plays a crucial role safely and reliably moving the energy that powers. The day to day lives of millions of people across our footprint here in the U S and abroad.
Traditional sources of energy like petroleum products, we transport and store.
We will continue to be an important part of our energy supply both in the U S and across the globe for many decades to come.
At the same time.
Working to assured new stars instrumental in emerging energy opportunities that lower emissions and generate solid returns, notably our west coast renewable fuels network and new projects in development for our ammonia system.
But taking in all of the above approach to our project development and staying committed to doing the right thing for our unit holders our employees our communities and our planet.
We are building a resilient financially flexible business position to build value now and in the future.
And with that I'll open it up for Q&A.
Thank you.
And as a reminder, if you have a question at this time. Please press Star then the number one on your Touchtone telephone.
Your question has been answered or you wish to remove yourself from the queue. Please press the county will fast for a moment to compile the Q&A roster.
Yeah.
Your first question comes from the line of Theresa Chen from Barclays. Your line is open.
Hi, everyone.
Take care all the color on the fundamental strength and tailwind.
Heading into the ended the year at Max.
Firstly to start on what Youre seeing in the Permian as far as taking your exit rate higher and just given the current commodity backdrop. What are you hearing on the ground from your producers as far as activity and plans going forward.
So Theresa this is Danny Oliver.
We continue to see the growth driven by the privates. The publics are still being very disciplined in their capital spend and so far that's what they are indicating.
We move into 'twenty, two as well even here.
In an $80 crude environment. So we expect to see more of that but the increase in our exit rate is really all due to the privates just rolling some projects up into the current year.
Got it and then on the refined products side.
Given the significant strength, you've seen across your assets, even relative to pre pandemic levels.
Do you think this is in part just related to pent up demand thats going to wane over time.
People arent willing to Ken on the claim.
But in 2022 and beyond maybe it normalizes.
As far as 2022 outlook and such how do you think this trend.
I think we will continue to see.
Grid plus percent of pre pandemic levels. You know most of these markets grew about let's call it 1% or so a year and then we had a year where.
In 2020, where because of the pandemic, obviously demand fell off and I think we're just catch it up a little bit on a couple of years of <unk>.
One or so percent growth the thing I would also point out is where our assets is a real advantage for us. We're not we don't do a lot of refined products on the coasts are refined products pipeline systems are up through the Midwest and so that demand is going to remain steady I do think you have a point I think people are going to drive more than they're going to fly they're going to drive as they possibly can.
Flying is difficult right now.
And I would expect that to continue throughout 2022 against that far beyond that it goes but I see.
Strong results for our refined products systems going forward.
Got it.
Lastly, if I may on your West Coast biofuel expansion.
Clearly you've been an active participant for a number of years now and Biofuels handling in general energy transition things.
I was wondering just in terms of the next steps.
How much more capex or.
Project spending.
Be necessary from here because I believe initially there was some money to be spent to convert the high sulfur fuel oil tanks and now youre converting thinking about let's see thanks. So how should we think about operating leverage across that system as time goes on.
So the capital spend on the West Coast, specifically, we will start to wane. After this year. This is probably our biggest year of capital spend.
So once we've got the projects behind us too.
Dedicate some storage to the renewables and be able to get that.
To the truck rack and keep it segregated the spin going forward to swing tanks will be very minimal.
Thank you.
Thank you. Thank you.
And I'm showing no further questions at this time I would like to turn it back to Pam Smith for any further comments.
Alright, Thank you very much Patricia we would once again like to thank everyone for joining us on the call today.
If anyone has any additional questions. Please feel free to contact <unk> Investor relations. Thanks.
Thanks, again and have a great day.
And this concludes today's conference call. Thank you all for joining you may now disconnect.
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Good morning, and thank you first lien by welcome to the Q3 2021 they start energy L. P earnings conference call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press Star then zero on your Touchtone telephone I would now like to turn the conference over to your host Pam Schmidt.
Vice President of Investor Relations. Please go ahead.
Good morning, and welcome to today's call.
On the call today are new start energy L. P President and CEO, Brad Barron Executive Vice President and CFO, Tom Shoaf, along with other members of our management team.
Before we get started we would like to remind you that during the course of this call. Mr Management will make statements about our current views concerning the future performance of Neustar that are forward looking statements.
These statements are subject to the various risks uncertainties and assumptions described in our filings with the Securities and Exchange Commission.
Actual results may differ materially from those described in the forward looking statements.
During the course of this call. We will also refer to certain non-GAAP financial measures. These non-GAAP financial measures should not be considered as alternatives to GAAP measures reconciliations of certain of these non-GAAP financial measures to U S. GAAP, maybe found in our earnings press release with additional reconciliations located on the financials page of it.
Investors section of our website at Neustar energy Dot com.
With that I will turn the call over to Brad.
Good morning. Thank you all for taking the time to join us today.
We have a lot of positive news for you today on our successful closing on the sale of Eastern U S terminal package.
Our solid results for the third quarter and also our expectations for full year 2021.
Starting with the sale in October we announced that we closed on our $250 million sale of Eastern U S terminal facilities to Sunoco LP.
As promised for deploying those sales proceeds to lower our leverage and we now expect our year end debt to EBITDA metric to be below four times.
We also continue expect to self fund all of our spending from our internally generated cash flows in 2021 and beyond.
With the sale we've taken another important step in executing on our plan to optimize our business and strengthen our balance sheet in order to focus 100% of our resources on our core asset footprint, including our refined products assets, our crude assets, which include our Permian Corpus Christi systems in St James facility.
Our west coast renewable.
<unk> network and our ammonia system.
Now I'll turn to some highlights of our third quarter results.
This quarter, we once again delivered solid results under challenging conditions and demonstrated the strength and resilience of our assets.
As we generated adjusted EBITDA for the third quarter comparable to <unk> 2020, and up 5% over pre pandemic three Q2 thousand 19.
As well as DCF up 10% over <unk> 2020 adjusted DCF.
Starting with our refined products in the third quarter, we continued to see solid steady refined product demand in the markets, we serve maintaining a strong 105% pre pandemic demand on pace with second quarter of this year.
Our third quarter refined product throughput were up 16% over <unk> 2020.
Up 8% over <unk> 2019.
We continue to expect our refined product systems to perform at or above 100% of our pre pandemic run rate for the remainder of 2021.
Steady recovery in front and product demand is also continue to Stoke rebound in U S refiners demand for crude which has contributed to higher throughput.
For our crude pipelines in the third quarter up 11%.
Over to Q2 'twenty one.
<unk> 2020.
Rebound in crude demand in the U S and abroad has in turn driven higher than forecasted global crude prices, which is lifted U S shale production, primarily in the Permian basin.
Thanks, once again to our Permian crude systems core of the core premier location lowest producer costs and highest product quality, we've seen strong volume improvement there.
We're happy to report that in the third quarter, our Permian systems volumes grew to a record breaking average of 502000 barrels per day, that's up 12% over <unk> of this year up 19% over <unk> last year and up 11% over the peak pre Covid quarterly average which occurred in the first quarter of 2020.
In October our Permian volumes continued to rebound ahead of the rest of the Permian basin and increased to an average of 512000 barrels a day.
We're now forecasting we will exit 2021 at around 514000 barrels per day, which is up from the 500000 barrels a day, we forecasted in the second quarter.
Looking back to the beginning of this year, we're even more encouraged by the fact that our Permian system is up an impressive 9% from the 470000 barrels per day, we expected back in February.
We still forecast the Eagle Ford <unk> volumes in our Corpus Christi crude system at our MVC levels for the rest of the year, but we've seen modest incremental improvement in recent months.
<unk> long haul barrels from the Permian, which we hope is early indication of future improvement with rising global demand.
Improving global demand combined with sustained healthy U S shale production growth should increase U S crude exports overtime, which should also improve volumes.
Our corpus Christi crude system as well as at our St. James Terminal.
But we also expect to begin benefiting from inbound barrels from the reversal of cap line starting in 2022.
Turning to our renewable fuel system on the West coast.
As we've discussed in prior quarters.
Through our West coast renewable fuels network Neustar plays an integral role in facilitating a low carbon renewable fuels significantly reduce emissions from transportation.
Neustar currently handle that impressive share of California renewable fuels.
According to the latest available data from the state of California.
For the second quarter of 2021, new store handled about 7% of California's total biodiesel volumes.
Over 20%, California's ethanol and close to 30% of the <unk>.
<unk> renewable diesel volumes.
Instead it doesn't yet include the growing proportion of renewable jet that we handle in the region, which is substantial.
We expect new start leadership and the low carbon fuel transition in California and across the West coast to continue to grow as we complete our planned tank conversion projects there.
And we plan to continue to develop projects to expand our knowable fuel logistics services at low carbon fuel legislative mandates proliferate and customer demand increases.
Turning to ammonia.
Throughput on our ammonia system was up 39% compared to the same quarter last year as we touched on last quarter, we're working to increase our systems utilization, even more through low spend high return projects to connect and extend our system in new and current customers.
These projects would supply ammonia for current applications like fertilizer that augments use food production as well as corn for ethanol production across the Midwest.
And we're looking at ammonia future as well green ammonia for existing applications and for exciting opportunities like renewable electricity generation and safe efficient transportation for hydrogen to power fuel cell vehicles.
We look forward to being able to provide more details on.
When these projects to increase our ammonia systems utilization and profitability in the short and longer term at multiple locations on our system with <unk> 2000 miles from Louisiana up to and across the mid continent.
I'm proud of the part.
The new store place today, and transporting traditional ammonia to support our nation's food in ethanol production. We're also excited about new start developing role in the future of ammonia and hydrogen.
So we're pleased with the strong results that our business generated in third quarter.
As well as continue to bounce back from the lingering impact of the pandemic and we are expecting our full year 2021 results to demonstrate once again, the strength and resilience of our assets our employees and our business.
That I will turn it over to Tom.
To give you more details on <unk> results and outlook.
Thanks, Brad and good morning, everyone before I get started I want to note that our third quarter 2021 results include a $130 million noncash.
Noncash charge related to the sale of our eastern U S terminal operations, and a $59 million noncash impairment charge on a portion of our Houston 12 inch pipeline as well as a $9 million gain from our insurance proceeds to rebuild tanks that are Selby terminal and the results. We are presenting today are adjusted to exclude.
Those items.
Brad mentioned, our third quarter 2021 results demonstrate the strength of our assets even as global demand continues to rebound from 2020 pandemic lows.
Our DCF available to common limited partners was $92 million in the third quarter up $8 million or 10% compared to the third quarter 2000, Twenty's adjusted DCF of $84 million and our.
Our distribution coverage ratio to the common limited partners was two one times.
This quarter, we generated adjusted EBITDA of $177 million, which is comparable to the third quarter 2020 results.
Turning now to our segments third.
Third quarter 2021, adjusted EBITDA in our pipeline segment was $145 million up $16 million or 12% compared to $129 million in the third quarter of 2020.
We saw sustained solid rebound in our pipeline segment throughput volumes compared to <unk> 2021, <unk> 2020, and pre Covid <unk> 2019.
Our third quarter 2021, adjusted EBITDA in our storage segment was $59 million down $15 million compared to EBITDA of $74 million in the third quarter of 2020, driven by the roll off of 2020, contango contracts that point Tupper, and Piney point as well as from customer transitions tank main.
In preparation for Hurricane Ida mainly at St. James in point Tupper.
At the end of the third quarter 2021, our debt balance was $3 4 billion and we had over $900 million available on our $1 billion revolving credit facility.
We ended the third quarter with debt to EBITDA ratio of four one times, which we expect to improve through the end of the year.
Turning to our full year 2021 projections taking into account the eastern U S terminal sale, we expect <unk> 2021, adjusted EBITDA to be in the range of 685 $715 million slightly higher than the previous expectations and as Brad noted we continue to expect self fund all of our <unk>.
'twenty, one spending from internally generated cash flows.
Moving to strategic capital, we plan to spend $140 million to $160 million in 2021.
Of our total 2021 strategic spending approximately 100, sorry, approximately $35 million is for Permian system and around $50 million is for our west coast renewable fuels network.
In addition, we continue to expect to spend $35 million to $45 million on reliability capital spending in 2021.
Based on these projections, we expect our debt to EBITDA ratio at the end of 2021 to be below four times.
And we will be achieving these solid results, while generating internal cash flows to meet all of our spending needs and with that I'll turn the call back over to Brad.
Thanks, Tom.
The recovery in the global economy, along with strong energy prices has been encouraging signs for 2022.
Once again this past quarter, we continued to deliver on our commitment to all of our stakeholders. We generated we've strengthened our balance sheet. We are generating strong results for developing and executing a low multiple organic growth projects for both traditional and renewable fuels across our footprint.
We are funding all of our spending from our internally generated cash flows and we're operating operating sustainably or protecting our employees our communities and the environment.
You will see in our recently posted a sustainability report, which augments. The presentation were released in July that our record demonstrates our commitment to sustainability.
Proud of the work, we do and we're committed to doing it well.
Our employees hard work Neustar plays a crucial role safely and reliably moving the energy that powers. The day to day lives of millions of people across our footprint here in the U S and abroad.
Traditional sources of energy like petroleum products, we transport and store.
We will continue to be an important part of our energy supply both in the U S and across the globe for many decades to come.
At the same time.
Working to assure new stars instrumental in emerging energy opportunities that lower emissions and generate solid returns, notably our west coast renewable fuels network and new projects in development for our ammonia system.
But taking in all of the above approach to our project development and staying committed to doing the right thing for our unit holders our employees our communities and our planet.
We are building a resilient financially flexible business positioned to build value now and in the future.
And with that I'll open it up for Q&A.
Thank you.
And as a reminder, if you have a question at this time. Please press. The Star then the number one on your Touchtone telephone.
Your question has been answered or you wish to remove yourself from the queue. Please press the county will fall for a moment to compile the Q&A roster.
Yeah.
Sure.
Your first question comes from the line of Theresa Chen from Barclays. Your line is open.
Hi, everyone.
Take care all the color on the fundamental strength and tailwind heading into the end of the year and next.
Firstly can I start on what Youre seeing in the Permian.
Taking your exit rate higher and just given the current commodity backdrop. What are you hearing on the ground from your producers as far as activity and plans going forward.
So Theresa this is Danny Oliver.
We continue to see the growth driven by the privates. The publics are still being very disciplined in their capital spend and so far that's what they are indicating.
As we move into 'twenty, two as well even here.
$80 crude environment. So we expect to see more of that but the increase in our exit rate is really all due to the privates just rolling some projects up into the current year.
Got it and then on the refined products side.
The significant strength, you're seeing across your assets, even relative to pre pandemic levels.
Do you think this is in part just related to.
Up demand thats going to wane over time.
And if people arent willing to cannot mcclain, the Patrick drive, but in 2022 and beyond maybe it normalizes.
As far as 2022 outlook and such how do you think thats trench.
We will continue to see 100 plus percent of pre pandemic levels. You know most of these markets grew about let's call it 1% or so a year and then we had a year where.
2020, where because of the pandemic, obviously demand fell off and I think we're just catching up a little bit on a couple of years of.
<unk>, one or so percent growth.
I would also point out is where our assets is a real advantage for us. We're not we don't do a lot of refined products on the coasts are refined products pipeline systems were up through the Midwest and so that demand is going to remain steady I do think you have a point I think people are going to drive more than they're going to fly they're going to drive as they possibly can.
Lying is difficult right now and I would expect that to continue throughout 2022 against that far beyond that it goes but I see.
Strong results for our refined product systems going forward.
Got it.
And lastly, if I may.
West Coast biofuel expansion and clearly you've been an active participant for a number of years now and Biofuels handling in general energy transition.
And I was wondering just in terms of the next steps.
How much more capex or.
Project spending.
Be necessary from here because I believe initially there was some money to be spent to convert the high sulfur fuel oil tanks and now youre converting OSB tanks. So how should we think about operating leverage across that system as time goes on.
Yes, so the capital spend on the West Coast, specifically, we will start to wane. After this year. This is probably our biggest year of capital spend.
So once we've got the projects behind us too.
Dedicate some storage to the renewables and be able to get that.
To the truck rack and keep that segregated the spin going forward to swing tanks will be very minimal.
Thank you.
Thank you. Thank you.
And I'm showing no further questions at this time I would like to turn it back to Pam Smith for any further comments.
Alright, Thank you very much Patricia we would once again like to thank everyone for joining us on the call today. If anyone has any additional questions. Please feel free to contact <unk> Investor relations. Thanks.
Thanks, again and have a great day.
And this concludes today's conference call. Thank you all for joining you may now disconnect.