Magellan Midstream and Valero Form JV to Expand Marine Terminal

Magellan Midstream Partners, L.P. and Valero Energy Corporation today announced Phase 2 of its expansion of a marine storage facility currently under construction along the Houston Ship Channel in Pasadena, The terminal, which will handle petroleum products, including multiple grades of gasoline, diesel and jet fuel, and renewable fuels, will be owned by a limited liability company that is owned 50/50 by Magellan and Valero.  Initially, the terminal will include 5 million barrels of storage, truck loading facilities and 2 proprietary ship docks.

Construction on phase 1 of the project began in July 2016 and includes approximately 1 million barrels of storage and a new marine dock capable of handling Panamax-sized ships or barges with up to a 40-foot draft. This first phase will now also be owned by the jointly-owned company.

Phase 2 consists of an incremental 4 million barrels of storage, a 3-bay truck rack and a second marine dock capable of handling Aframax-sized vessels with up to a 45-foot draft. Once completed, the terminal will be connected via pipeline to Valero’s refineries in Houston and Texas City, Texas, the Colonial and Explorer pipelines, and Magellan’s Galena Park terminal facility.

Combined, phases 1 and 2 of construction are currently estimated to cost approximately $820 million, which will be funded equally by capital contributions from Magellan and Valero. Both phases are fully contracted with long-term customer commitments.

Magellan currently serves as construction manager and will operate the terminal once work is complete. Phase 1 of the new terminal is expected to be operational in early 2019, with phase 2 expected to be placed in service in early 2020, subject to receipt of necessary permits and regulatory approvals.

“Magellan is pleased to join forces with Valero to combine our extensive pipeline and terminals capabilities with their world-renowned refining and marketing expertise to further expand the state-of-the-art marine facility being constructed in Pasadena,” said Michael Mears, Magellan’s chairman, president and chief executive officer. “Demand for refined products from the Gulf Coast continues to grow, and together, we are well-positioned to continue expanding our marine capabilities to meet this demand from both domestic and international markets.”

If warranted by additional demand, the terminal could be expanded to include an incremental 5 million barrels of storage, another 3 docks and expanded truck loading capacity, for a maximum footprint of as much as 10 million barrels of total storage and 5 docks. All future expansions are expected to be owned by the jointly-owned company.

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