Magellan Expands, Improves Pipeline Systems
By Jack Money, The Oklahoman
May 13–TULSA — Magellan Midstream Partners will spend $240 million in Texas to improve its pipeline and storage capacities and will build a direct connection to a refinery that’s doubling its size, partnership officials announced Monday.
Magellan will build 1.2 million barrels of storage capacity and trucking/loading capabilities at its East Houston terminal, 200,000 barrels of storage capacity at its terminal in Frost, Texas, and will add ethanol blending capabilities and loading capabilities at its West Fort Worth terminal, partnership officials said.
It also plans to expand loading capabilities at its terminal in Odessa, Texas, partnership, officials said.
“We are looking at a number of projects, bolt-on type of expansions,” said Bruce Heine, a spokesman for the partnership.
Heine said demand for fuel in Odessa exceeds what the partnership can provide, for example.
“We see a lot of future growth opportunities associated with this development.”
The key to it all, though, is a pipeline Magellan will build to connect its existing terminal at East Houston — an origin point for its 8,500 mile long pipeline system — to the refinery hub of Port Author, Texas.
The partnership has a 15-year-long commitment from Motiva Enterprises to use the line to carry refined products from its growing refinery there to Magellan’s system. The new 16-inch line, which will be capable of transporting 150,000 barrels of product a day, also gives Magellan access to other refineries in the area.
The Motiva Enterprises refinery, owned by affiliates of Shell and Saudi Aramco, is being expanded to have a capacity of 600,000 barrels a day by 2010. All of Magellan’s improvements will be done by 2011, partnership officials said.
John E. Olson, co-manager of Houston Energy Partners, said the refinery expansion is costing about $6 billion, and said the operation will be connected to “Pipeline Alley,” a complex system of pipelines that can carry product to points as distant as the East Coast.
The added product it will put out will reduce unit costs on the pipeline systems and also will create a good, profitable spending opportunity for Magellan.
“In turn, that provides for more sustained growth in their business,” Olson said.
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