Plans to Build Refined Petroleum Products Pipeline from Port Arthur to Houston
TULSA, Okla. – Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it plans to invest $240 million to build energy infrastructure in Texas, providing the partnership a direct pipeline connection to the refinery hub of Port Arthur.
Pipeline construction. Magellan plans to construct an 80-mile, 16-inch diameter refined petroleum products pipeline to connect the refining region of Port Arthur , Texas to the partnership's existing terminal at East Houston , which serves as an origin point for Magellan's 8,500-mile pipeline system. The new pipeline, which will be capable of transporting 150,000 barrels per day, is supported by a 15-year agreement with Motiva Enterprises LLC. Based on current project plans, the pipeline system is expected to be fully operational by 2011, consistent with the completion of Motiva's Port Arthur refinery expansion. The pipeline system also will allow Magellan to provide transportation services for other refiners in the Port Arthur area.
In addition, a pipeline connection will be added between the partnership's East Houston terminal and Motiva's existing Pasadena terminal. Currently, Magellan's pipeline system delivers product to three Motiva terminals in the Texas market, including Hearne, Waco and Dallas .
Terminal enhancements. Magellan also intends to invest in infrastructure at its existing asset locations to increase the partnership's capabilities to handle additional transportation volumes, including construction of 1.2 million barrels of storage and three additional truck rack lanes at its East Houston terminal and 200,000 barrels of storage at its Frost, Texas facility. These enhancements are expected to be fully operational by 2010.
Further, the partnership is adding ethanol blending capabilities and a third truck rack lane at its West Fort Worth terminal by third quarter 2008 and intends to expand loading capabilities at its Odessa terminal with the addition of two truck rack lanes by early 2009.
“We are pleased to continue expanding our Texas footprint to meet growing demand in that market while partnering with Motiva to provide a direct connection to the strategic Port Arthur refining region,” said Don Wellendorf, chief executive officer. “We continue to focus on expansion projects that will provide valuable services to our customers and generate attractive growth opportunities for our unitholders.”
Including $270 million of expansion projects already underway and these new Texas pipeline and terminal investments, management's expansion capital spending estimate for 2008 is now approximately $300 million, with an additional $140 million of spending needed in 2009 and $70 million in 2010 to complete these projects. These expansion capital estimates exclude potential acquisitions or spending on more than $500 million of other potential growth projects in earlier stages of development .
The partnership will host an analyst conference call to discuss the projects tomorrow, Tues. May 13 at 10:00 a.m. Eastern. To participate in the conference call, dial (800) 533-7619 and provide code 9838144. Investors also may listen to the call via the partnership's web site at http://www.magellanlp.com/webcasts.aspx.
Audio replays of the conference call will be available from 1:00 p.m. Eastern on May 13 through midnight on May 19. To access the replay, dial (888) 203-1112 and provide code 9838144. The replay also will be available at http://www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership formed to own, operate and acquire a diversified portfolio of energy assets. The partnership primarily transports, stores and distributes refined petroleum products. More information is available at http://www.magellanlp.com.
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Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects or to complete identified projects on time and at projected costs; (2) price fluctuations for natural gas liquids and refined petroleum products; (3) overall demand for natural gas liquids, refined petroleum products, natural gas, oil and ammonia in the United States; (4) changes in the partnership's tariff rates implemented by the Federal Energy Regulatory Commission, the United States Surface Transportation Board and state regulatory agencies; (5) shut-downs or cutbacks at major refineries, petrochemical plants, ammonia production facilities or other businesses that use or supply the partnership's services; (6) changes in the throughput or interruption in service on petroleum products pipelines owned and operated by third parties and connected to the partnership's petroleum products terminals or petroleum products pipeline system; (7) the occurrence of an operational hazard or unforeseen interruption for which the partnership is not adequately insured; (8) the treatment of the partnership as a corporation for federal or state income tax purposes or if the partnership becomes subject to significant forms of other taxation; and (9) an increase in the competition the partnership's operations encounter. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. The partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances occurring after today's date.
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