Reversal/Conversion Of Pipeline To Crude Service Planned

April 2011 Vol. 238 No. 4

Magellan Midstream Partners, L.P. is proceeding with permitting and final engineering for the potential reversal and conversion of a portion of the partnership’s Houston-to-El Paso pipeline to crude oil service.

The reversed pipeline system would have a capacity of up to 200,000 bpd. Recent expressions of interest received from potential shippers indicate sufficient support exists to justify the project. However, the partnership will make a definitive decision on this project once binding agreements are executed.

“Recent market dynamics continue to favor the reversal and conversion of Magellan’s Houston-to-El Paso pipeline to crude oil service as new outlets for West Texas crude oil are sought by producers,” said Mike Mears, CEO. “We believe our pipeline system coupled with the crude oil distribution system purchased last year would provide the most direct and cost-efficient route to deliver West Texas crude oil to the refineries on the Houston Ship Channel and Texas City.”

Management continues to finalize the scope of this project and to negotiate binding agreements with shippers and expects to make a decision on this project within the next two months. If the project is approved and this schedule is maintained, the partnership expects the reversed crude oil pipeline to be operational within 18 to 24 months.