Magellan Midstream to Expand Crane-to-Houston Crude Oil Pipeline Capacity

abarrelfullabarrelfull wrote on 16 Mar 2012 09:41
Tags: magellen pipeline usa

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Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it plans to expand the capacity of its Crane-to-Houston crude oil pipeline to 225,000 barrels per day (bpd). Based on Magellan’s recent successful binding open season, the expanded pipeline capacity is fully committed with long-term agreements.

“The market clearly confirmed the attractive fundamentals of our Crane-to-Houston crude oil pipeline, and we are pleased to increase the scope of our project in response to this strong industry demand,” said Michael Mears, chief executive officer. “We continue to believe our Crane-to-Houston pipeline will be the most direct and cost-efficient route to deliver growing West Texas crude oil production to the refineries in the Houston and Texas City area, providing an alternative transportation option that will help alleviate the current crude oil oversupply situation in Cushing, Oklahoma.”

Magellan had previously announced the initiation of a project to reverse and convert to crude oil service its pipeline from Crane, Texas to its East Houston, Texas terminal, with an expected initial capacity of 135,000 bpd and a cost of $245 million. The project is now estimated to cost $375 million including the cost to expand the system to its maximum capacity of 225,000 bpd.

Subject to receiving the necessary permits and regulatory approvals, the partnership expects the reversed pipeline to begin transporting crude oil at partial capacity by early 2013, ramping to its full 225,000-bpd capacity by mid-2013.

Further, Magellan continues to assess the construction of a new pipeline segment or the use of existing third-party infrastructure to transport crude oil from Midland, Texas to Crane for delivery to the Houston area. If deemed necessary, the partnership currently estimates the new pipeline segment would cost an additional $70 million to construct.

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