Magellan Midstream Partners Revamps Port Arthur Pipeline Project
December 29 2008 - 8:55AM
PR Newswire (US)
Joins Forces with Explorer Pipeline TULSA, Okla., Dec. 29
/PRNewswire-FirstCall/ -- Magellan Midstream Partners, L.P.
(NYSE:MMP) announced today that it will join forces with Explorer
Pipeline to transport product from Motiva Enterprises LLC's Port
Arthur, Texas refinery to markets in East Texas. Rather than
building an 80-mile pipeline between Port Arthur and Houston as
initially announced in May 2008, Magellan will build a 9-mile,
20-inch diameter pipeline to connect its East Houston terminal,
which serves as an origin point for Magellan's 8,500-mile pipeline
system, to Explorer's existing 28-inch diameter pipeline that
transports petroleum products from Port Arthur to Fauna, Texas,
which is just east of the Houston area. Magellan will also add a
pipeline connection between its East Houston terminal and Motiva's
existing Pasadena terminal. These projects are expected to be
operational by 2011. Magellan still plans to increase its
capabilities to handle additional transportation volumes at its
existing locations including construction of 900,000 barrels of
storage and three additional truck rack lanes at its East Houston
terminal and 200,000 barrels of storage at its Frost, Texas
facility. These enhancements are expected to be fully operational
by 2010. These projects continue to be supported by a 15-year
agreement with Motiva. Further, the partnership has already added
ethanol blending capabilities and a third truck rack lane at its
West Fort Worth terminal and is expanding loading capabilities at
its Odessa terminal with the addition of two truck rack lanes
expected by early 2009, both consistent with the original
announcement. Magellan expects the cost of the revamped project to
be $120 million, or half of the initial project cost of $240
million. Based on current projections, these growth projects are
expected to generate an average annual operating profit of
approximately $9 million during the first three years of full
operation, including about $3 million of depreciation. "Since we
announced this project in mid 2008, we have worked to reduce the
capital required to meet Motiva's needs," said Don Wellendorf,
chief executive officer. "By utilizing existing infrastructure, the
revised scope significantly lessens our execution risk while
providing a slightly improved initial return. Importantly, the
project continues to provide opportunity for future growth, which
we are pursuing to further improve project returns." Based on the
progress of expansion projects already underway, including this
project revision, management currently expects to spend about $270
million in 2008, with additional spending of $190 million primarily
in 2009 to complete these projects. In addition, the partnership
continues to analyze more than $500 million of other potential
growth projects in earlier stages of development, which have been
excluded from these spending estimates. About Magellan Midstream
Partners, L.P. Magellan Midstream Partners, L.P. (NYSE:MMP) is a
publicly traded partnership formed to own, operate and acquire a
diversified portfolio of energy assets. The partnership primarily
transports, stores and distributes refined petroleum products. More
information is available at http://www.magellanlp.com/. MMP's
general partner interest and related incentive distribution rights
are owned by Magellan Midstream Holdings, L.P. (NYSE:MGG). Portions
of this document may 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.
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. Contact: Investors:
Media: Paula Farrell Bruce Heine (918) 574-7650 (918) 645-8989
http://www.newscom.com/cgi-bin/prnh/20031107/DAMAGELOGO
http://photoarchive.ap.org/ DATASOURCE: Magellan Midstream
Partners, L.P. CONTACT: Investors, Paula Farrell, +1-918-574-7650,
, or Media, Bruce Heine, +1-918-645-8989, , both of Magellan
Midstream Partners, L.P. Web site: http://www.magellanlp.com/
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