TULSA, Okla. – 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.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes petroleum products. The partnership owns the longest refined petroleum products pipeline system in the country, with access to more than 40% of the nation’s refining capacity, and can store 80 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Among the key risk factors associated with the project that may have a direct impact on the partnership’s results of operations and financial condition are: (1) its ability to obtain all required permits and regulatory approvals on time; (2) its ability to complete construction of the project on time and at expected costs; (3) its ability to obtain access to existing facilities or construct new facilities necessary to transport crude oil from Midland, Texas to Crane, Texas; (4) price fluctuations and overall demand for crude oil in the United States; (5) changes in the partnership’s tariff rates or other terms imposed by state or federal regulatory agencies; (6) shut-downs or cutbacks at major refineries or other businesses that use or supply the partnership’s services; (7) the occurrence of an operational hazard or unforeseen interruption for which the partnership is not adequately insured; (8) disruption in the debt and equity markets that negatively impacts the partnership’s ability to finance its capital spending and (9) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2011. The partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances occurring after today's date.