Magellan mulls more expansion of Texas-Gulf pipeline

Reuters News
Posted: Apr 03, 2012 12:38 PM
Magellan mulls more expansion of Texas-Gulf pipeline

HOUSTON (Reuters) - Magellan Midstream Partners LP is considering further expansion of oil pipeline capacity from west Texas to the Gulf Coast in addition to projects already under way, Chairman and CEO Michael Mears said on Tuesday.

"We're looking at further expansions from that market to the Gulf Coast," Mears told an analyst meeting. "We don't have anything to announce today. It's too early in the process."

Magellan awaits permits and regulatory approvals for previously announced plans to reverse the Crane, Texas-to Houston portion of the Longhorn Pipeline system.

The reversed segment is expected to start flowing 135,000 barrels per day in early 2013 and expand to 225,000 bpd by mid-2013.

Mears said it appears that expected growth in Permian Basin oil production using new drilling techniques would support even further expansion.

"Subsequent discussions with the market indicate there's a tremendous need for this service," Mears said.

Pipeline capacity from the Permian currently flows mainly to the Cushing, Oklahoma, trading and storage hub. The glut of oil in the Midwest is forcing a realignment.

(Reporting by Bruce Nichols; Editing by Dale Hudson and Bob Burgdorfer)