Magellan Midstream Partners said Aug. 29 it would increase the scope of its planned refined products pipeline network expansion in Texas from the Houston area to El Paso, adding an additional pipeline and capacity from the initial project.
Not registered?
Receive daily email alerts, subscriber notes & personalize your experience.
Register NowThe expansion would increase capacity by 30,000 b/d to 100,000 b/d in part by building a new 16-inch, 30-mile pipeline between Odessa and Crane, Texas in the Permian Basin, as well as additional storage facilities. The original plan was to hike capacity up to 85,000 b/d, but Magellan said extra customer interest sparked the increased scope of the project.
The overall project increases pipeline capacity along 265 miles from Odessa to El Paso. The project also would take advantage of underutilized pipeline capacity from the Houston oil-refining network to the Odessa hub.
The pipeline system primarily moves gasoline and diesel fuel from US Gulf Coast refineries to El Paso, with further pipeline access into New Mexico, and connections to third-party pipelines to Arizona and Mexico.
"Building on the 2020 expansion of our West Texas refined products pipeline system, Magellan is pleased to further expand our capabilities to El Paso, which serves as the gateway to a number of key demand centers that can benefit from our system's extensive optionality," said Magellan CEO Aaron Milford in a statement. "To meet strong market demand, we have increased the scope of this expansion to deliver essential fuels supported by take-or-pay commitments from quality customers, providing an attractive return for our investors."
Magellan said the project, which costs about $125 million, could be completed by early 2024 -- pushed back from a previous mid-2023 estimate -- following the addition of incremental pumping capabilities and the construction of additional storage in El Paso.
This project follows a slew of other recent announcements to move more refined products into the Permian Basin region and extending to the Rockies.
Magellan recently completed in the spring a refined products expansion into New Mexico. Magellan also announced a project to expand refined products pipeline capacity into Colorado as demand picks up and refineries continue to ramp up run rates.
By adding new pumping stations and incremental pumping capabilities, Magellan is expanding its 450-mile pipeline segment that runs from El Dorado, Kansas, to Denver and Colorado Springs markets in Colorado by 5,000 b/d to a new total capacity of 65,000 b/d by end-2022.
The pipeline transports various grades of gasoline, diesel and jet fuel to the greater Denver metro area, including the Denver International Airport. Apart from trekking south from Denver to Colorado Springs, Magellan's network also stretches to the north to Wyoming hubs and to Rapid City, South Dakota. Magellan said the expansion would move more products into Colorado from Houston-area refineries and from Oklahoma hubs.
Enterprise Products Partners in April said it will repurpose a portion of its Mid-America NGL pipeline system to move refined products from the Permian Basin to the Rockies, effectively creating the equivalent of a smaller, new refinery in the region, analysts said.
The partial reversal and repurposing of the underutilized MAPL system, which is a series of parallel pipelines, could move up to 60,000 b/d of gasoline and diesel to New Mexico, Utah, and Colorado hubs. The project, which would be completed in the second half of 2023, also requires reversing and repurposing part of the Chaparral NGL system from the Houston area to the Permian for products.
Enterprise touted the project as taking advantage of weaker MAPL volumes to help bring relief to prices at the pump in West Texas, New Mexico, Colorado, Utah, and other Rockies states. However, analysts said it also would represent competition to Rockies refiners, especially those most exposed, such as HF Sinclair.