Magellan to Expand Texas Refined Products System

Magellan Midstream Partners, L.P. plans to expand its refined products pipeline system to handle incremental demand for transportation of gasoline, diesel fuel and jet fuel to markets in Central and North Texas, the company announced Wednesday.

“Demand for refined petroleum products remains strong along Magellan’s extensive pipeline system,” Magellan CEO Michael Mears said in a company statement. “Magellan is pleased to meet the industry’s need for pipeline capacity serving the Dallas market and other important demand centers along our refined products pipeline system with an attractive investment supported by long-term commitments from well-known, strong creditworthy customers.”

The project entails constructing an approximately 135-mile, 16-inch pipeline from Magellan’s terminal in East Houston to Hearne, Texas, the company stated. Magellan noted that it will own the new pipeline via an undivided joint interest deal with Valero Energy Corp. Magellan also stated that its stake in the new pipe will enable delivery of additional product north to Temple, Waco and Dallas as well as to its Midcontinent markets, including Little Rock, Ark.

In addition, Magellan said that it plans to reverse an existing pipeline linked to the new segment in order to provide an incremental 85,000 barrels per day of refined products capacity from the Houston area. The reversal will facilitate a nearly 50-percent increase to service Magellan’s Texas, Midcontinent and Little Rock markets, the company stated.

Magellan also said that it will make various enhancements to its existing pipeline and terminal infrastructure, including constructing 1 million barrels of refined products storage on a combined basis at its facilities in Dallas, East Houston and Hearne. Moreover, it plans additional connections to third-party refineries, pipelines and terminals within the Houston Gulf Coast region. Magellan’s new marine terminal in Pasadena, Texas, will be one such linked facility; the Pasadena terminal is under construction and should begin operations in early 2019, Magellan stated.

Magellan reported that it expects to spend approximately $375 million for its share of the Texas expansion project. It anticipates the expanded refined products capacity will be available in mid-2019, subject to necessary permits and regulatory approvals.

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