Magellan Midstream Corpus Christi Condensate Splitter to be Commissioned in September

Researched by Industrial Info Resources (Sugar Land, Texas)--Construction of Magellan Midstream Partners, L.P.'s (NYSE:MMP) (Tulsa, Oklahoma) condensate splitter in Corpus Christi, Texas, is nearing completion, with commissioning expected to begin next month, company executives said Tuesday. Capital expenditures by the crude and refined oil products pipeline and terminals company are expected to total $850 million, based on the progress of projects now under way. It also includes a newly announced marine terminal along the Houston Ship Channel.

Chief Executive Officer Mike Mears said he expects the 50,000 barrel-per-day (BBL/d) Corpus Christi condensate splitter to be commercially operational late in the fourth quarter of 2016 with a total project cost of about $300 million. It would operate under a take-or-pay agreement with Trafigura Beheer BV (Geneva, Switzerland), a commodities trading company. Prior to the U.S. lifting its ban on crude oil exports (which also included condensate), condensate splitters were thought of as a means to turn condensate as saleable products (diesel, kerosene and naphtha) for export. Magellan maintains that even with the recent lifting of the export ban, splitters are important infrastructure to separate condensate into usable components to meet global demand. For related information, see April 6, 2016, article - Magellan Midstream: Key Projects in Line for Completion this Year.

Also in the project mix is the planned 1 million-barrel refined products and ethanol storage facility in Pasadena, Texas. The $335 million grassroot project would also include a marine dock capable of handling Panamax-sized ships or barges with up to a 40-foot draft. Magellan said it will also construct a 36-inch pipeline between its Galena Park, Texas, terminal and the new Pasadena terminal. Means said during the company's earnings conference call the facility could eventually be expanded to store up to 10 million barrels, with a total price tag of $1 billion. He said the price of each expansion would be less than the original grassroot build.

Meanwhile, he added, construction is complete for the Platteville-to-Cushing segment of the Saddlehorn pipeline, which will which will move crude oil 600 miles from the DJ Basin in Colorado to storage facilities in Cushing, Oklahoma. Means said the company's share of the cost for the joint project is now $230 million, which is $30 million less than expected. Saddlehorn is owned by Magellan Midstream, Plains All American Pipeline LP (NYSE:PAA) (Houston, Texas) and Anadarko Petroleum Corporation (NYSE:APC) (Houston).

The Platteville-to-Cushing segment is expected to be fully operational by the end of August. Pipeline installation is under way for the Carr-to-Platteville segment of Saddlehorn, with this extension expected to be operational by the end of 2016.

Industrial Info is tracking $1.64 billion in active Magellan Midstream projects. Magellan Midstream reported net income of $187.9 million for second-quarter 2016 compared to $177.4 million for second quarter 2015.

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