Magellan Midstream Partners with Valero to Expand Houston Ship Channel Storage Project

Researched by Industrial Info Resources (Sugar Land, Texas)--Magellan Midstream Partners LP (NYSE:MMP) (Tulsa, Oklahoma) and Valero Energy Corporation (NYSE: VLO) (San Antonio, Texas) are teaming up to expand a petroleum products storage project that is under construction on the Houston Ship Channel. Located in Pasadena, Texas, the facility will handle petroleum products including gasoline, diesel and jet fuel, and renewable fuels.

The facility will be owned by a limited liability company that is owned 50/50 by Magellan and Valero, and will initially include 5 million barrels of storage, truck loading facilities and two proprietary ship docks, the companies said in a joint statement.

The first phase of the facility is already under construction by Magellan, and includes 1 million barrels of storage and a marine dock capable of handling Panamax-sized ships or barges with up to a 40-foot draft. It is expected to be operational in early 2019. Burns & McDonnell Incorporated (Kansas City, Missouri) is performing the engineering on the first phase. For more information, see Industrial Info's project report.

Phase 2 is expected to come online in early 2020, according to the companies. Under the second phase, the facility will be expanded by an incremental 4 million barrels of storage, a three-bay truck rack and a second marine dock capable of handling Aframax-sized vessels with up to a 45-foot draft. After completion of the expansion, the Pasadena facility will be connected via pipeline to Valero's refineries in Houston and Texas City, Texas, and the Colonial and Explorer pipelines in addition to the already planned connection to Magellan's Galena Park terminal facility in Texas.

Altogether, the two phases are expected to cost about $820 million, the companies said. With the new arrangement, Magellan's incremental capital spending will be about $75 million more than its previous spending estimates of $335 million for Phase 1 alone.

"If warranted by additional demand, the new Pasadena facility could be expanded to include an incremental 5 million barrels of storage, another three docks and expanded truck loading capacity, for a maximum footprint of up to 10 million barrels of total storage and up to five docks," the companies said. "All future expansions are expected to be owned by the jointly-owned company."

Industrial Info is tracking nine active Magellan Midstream projects, including a planned $150 million refined products and crude oil terminal addition at its Corpus Christi, Texas, site. Now undergoing permitting, the project would add 1 million barrels of storage to the existing 3 million-barrel facility. For more information, see Industrial Info's project report.

Industrial Info also is tracking five terminal-related projects by Valero. This includes a dock expansion at the company's oil marine terminal in Port Arthur, Texas. The 310,000-barrel-per-day Pleasure Island dock would be expanded to include additional firths for liquefied petroleum gas (LPG) and refine product exports, or additional crude receipts. Construction is currently expected to kick off this December, with completion in mid-2018. For more information, see Industrial Info's project report.

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