Magellan, Plains All American Add BridgeTex Pipeline Expansion to $2.4 Billion in Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Magellan Midstream Partners LP (NYSE:MMP) (Tulsa, Oklahoma) and Plains All American Pipeline LP (NYSE:PAA) (Houston, Texas) have expanded at their jointly owned BridgeTex crude oil pipeline from 300,000 to 400,000 barrels per day (BBL/d) and are now launching an open season for the new capacity. A further expansion of the system may join more than $732 million in active projects involving Magellan and more than $1.7 billion involving Plains All American, according to Industrial Info's project platform.

The BridgeTex system transports crude oil from the Permian Basin near Colorado City, Texas, to the Houston Gulf Coast area. Another $30 million expansion to BridgeTex, which could take the capacity to 475,000 BBL/d, is being analyzed by the owners, who are weighing how customer demand will play out. For more information, see Industrial Info's project report.

Magellan has a string of projects planned for the Texas Gulf Coast area, including three that are slated to begin construction later this year, pending necessary permits: a $335 million terminal in Pasadena, which would store petroleum products, and ethanol gasoline and diesel; $150 million in terminal additions in Corpus Christi, which would increase storage capacity for commodities from the Eagle Ford Shale from 3 million to 4 million barrels; and $80 million in terminal additions in East Houston, which would nearly double capacity to just less than 4 million barrels. For more information, see Industrial Info's reports on the Pasadena, Corpus Christi and East Houston projects.

For more information on Magellan's plans for the area, see June 5, 2017, article - Magellan Midstream Could Further Expand Houston, Corpus Christi Presence.

In addition to BridgeTex, Plains All American is looking at the possibility of another line that would originate in the Permian Basin: the Permian-Cushing Pipeline, which would comprise an estimated $350 million segment in Texas, running from Midland to the Oklahoma border, and a $350 million segment in Oklahoma, running from the border to Plains All American's terminal in Cushing. As currently proposed, the 520-mile line would carry about 350,000 BBL/d and begin construction in the second quarter of 2018, although plenty of factors could increase, decrease or eliminate the estimated spending. For more information, see Industrial Info's project reports on the Texas and Oklahoma segments.

Greg L. Armstrong, the chief executive officer of Plains All American, addressed the increased demand in the company's earnings conference call for the first quarter: "Producer drilling activity in almost every area is ahead of levels included in our outlook at the beginning of the year, especially with respect to the Permian Basin. Rigs are becoming more efficient, laterals are longer, fracs are bigger and well productivity is increasing."

He added: "Accordingly, we continue to expect our transportation volumes to ramp up in the later part of this year and our confidence level with respect to that outlook is increased particularly with respect to the Permian."

To accommodate the anticipated influx growth from the Permian and other areas, Plains All American is undergoing $75 million in expansions at the Cushing terminal, including the addition of four tanks with a total capacity of 1.16 million barrels, which would take the facility's storage capacity for crude to almost 20 million barrels. For more information, see Industrial Info's project report.

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