Magellan Shifts Focus to Crude Oil Pipelines

Tuesday, April 08, 2014

Magellan Midstream Partners , the U.S. Midstream company with one of the longest pipeline systems in the country, is shifting its focus to crude oil with the majority of its capital spending earmarked for crude line projects.

In a presentation made to investors on Tuesday, Magellan said of the $950 million it plans to spend between 2014 and 2016, 80 percent will go to crude oil projects primarily in and around Texas and its shale oil plays.

"We're really going through a transformation in terms of where the growth is coming for Magellan," Chief Executive Officer Mike Mears told investors.

"If you're look at where we're spending our capital ... 80 percent of that is crude oil and only 20 percent is on products."

Once its completes its BridgeTex and Longhorn pipeline projects later this year, Magellan would have contributed 575,000 barrels per day (bpd) in takeaway capacity at the Permian Basin shale oil play out of 1.285 bpd in incremental capacity, according to its estimates.

Some $110 million will be spent on the Longhorn pipeline which is now ramping up flows and had its capacity expanded to 292,000 barrels per day (bpd), according to documents submitted to the pipeline regular and posted on Magellan's website.

Senior Vice President Jeff Selvidge said flows are expected to be at full capacity by "mid-year", although he named the capacity as 275,000 bpd and made no mention of the increases as shown in the documents sent to the regular.

He said the pipeline, which takes Permian crude oil from a point in Crane, Texas and moves it to Houston, would have utilization rates in the lower 90s percent.

Magellan had said previously it would expand capacity to 275,000 bpd but that it would be hard to reach such flow rates by the second quarter of this year before storage tanks are built at the origin and destination points of the line.

Magellan reversed the Longhorn line last year, enabling it to deliver crude from the Permian Basin to Houston. The project was one of a few that diverted crude from the Cushing oil hub to refineries on the Texas Gulf Coast.

A further $350 million is being spent on the BridgeTex pipeline project, which will also take crude oil from the Permian Basin to Houston, though its origin point will be at a different location than along the Longhorn pipeline.

Mears said the company still has not decided whether it would launch another open season for the BridgeTex pipeline.

"It's probably 50/50 whether we're going to do that now," he said adding that if Magellan doesn't, "that means we think we have much higher probability of filling it up without having an open season".

(Reporting by Sabina Zawadzki; Editing by Dan Grebler and Andrew Hay)

Maritime Reporter July 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Danos Fabrication Facility Creates 150 Jobs

Danos, a family owned oil and gas service company, announced plans to expand its fabrication capabilities, by opening a 120,000 square-foot fabrication facility in Amelia, La.

US’ Largest Floating Drydock Heads to Portland

The country’s largest floating drydock, the Vigorous, is headed for Portland this weekend. The drydock, a piece of equipment used to lift vessels as large as cruise ships out of the water,

Transocean Fleet Update Summary

Transocean Ltd. today issued a monthly fleet update summary which includes new contracts, changes to existing contracts and changes in estimated planned out-of-service

Energy

Danos Fabrication Facility Creates 150 Jobs

Danos, a family owned oil and gas service company, announced plans to expand its fabrication capabilities, by opening a 120,000 square-foot fabrication facility in Amelia, La.

Mozambique: $30b Invested for 2018 LNG Export

More than $30 billion will be invested initially in Mozambique's natural gas sector to build capacity to produce 20 million tonnes per year of liquefied natural gas (LNG),

LNG America Selects Topside Designer for LNG Bunker Barge

LNG America has selected Taylor-Wharton to commence the front-end engineering and design work for the cryogenic topside of the company’s 3,000 cubic meter Gemini

News

Danos Fabrication Facility Creates 150 Jobs

Danos, a family owned oil and gas service company, announced plans to expand its fabrication capabilities, by opening a 120,000 square-foot fabrication facility in Amelia, La.

US’ Largest Floating Drydock Heads to Portland

The country’s largest floating drydock, the Vigorous, is headed for Portland this weekend. The drydock, a piece of equipment used to lift vessels as large as cruise ships out of the water,

Port Metro Vancouver Approves $15m Coal Transfer Project

Port Metro Vancouver, Canada's largest port, said on Thursday it has approved a new facility to transfer coal from trains onto barges at Fraser Surrey Docks, a

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Naval Architecture Navigation Pipelines Salvage Ship Electronics Ship Simulators Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1153 sec (9 req/sec)