Tulsa, OK, Houston,
TX and The Woodlands, TX – Saddlehorn Pipeline Company, LLC (“Saddlehorn”)
announced today that it is combining projects with Grand Mesa Pipeline, LLC (“Grand
Mesa”) for the construction of a 20-inch undivided joint interest pipeline
which begins approximately 20 miles north of Saddlehorn’s Platteville, Colorado
origin at a junction near Grand Mesa’s Lucerne, Colorado origin. The joint
interest pipeline will deliver various grades of crude oil from the DJ Basin to
storage facilities in Cushing, Oklahoma.
As part of the undivided joint
interest, Saddlehorn and Grand Mesa will share in the costs for the pipeline that
is currently under construction. The initial capacity of the joint interest pipeline
is expected to be 340,000 barrels per day (“bpd”), with Saddlehorn
owning 190,000 bpd of capacity and Grand Mesa owning 150,000 bpd. Saddlehorn
and Grand Mesa will be responsible for their own commercial activities,
including customer relationships, contract terms and tariff structure, with
respect to their interest in the pipeline. Saddlehorn has the option to expand
the maximum capacity of the pipeline to more than 450,000 bpd in the future at
its sole discretion and cost. Saddlehorn would own all of the incremental
capacity from any expansion. Grand Mesa will retain ownership of its previously
acquired pipeline easements from Lucerne to Cushing for the potential future
development of transportation projects involving petroleum commodities other
than crude oil and condensate. With the consent and participation of
Saddlehorn, the parties may consider future opportunities using these easements
for projects involving the transportation of crude oil and condensate.
Saddlehorn will own origin
points at Platteville, including one million barrels of storage, and Carr,
Colorado as well as the pipeline segment from Carr to the Lucerne junction. Grand
Mesa will own origin points both at Lucerne and Riverside, Colorado as well as
the pipeline segment between Lucerne and Riverside.
Saddlehorn is owned 40% by Magellan
Midstream Partners, L.P. (NYSE: MMP) (“Magellan”), 40% by Plains All American
Pipeline, L.P. (NYSE: PAA) and 20% by Anadarko Petroleum Corporation (NYSE:
APC). Grand Mesa is owned 100% by NGL Energy Partners LP (NYSE: NGL).
Magellan is serving as
construction manager and operator of the pipeline system. Saddlehorn expects to
spend approximately $650 million for its share of the undivided joint interest
pipeline and the additional assets it will own, compared to previous spending
estimates of up to $950 million for a comparable project scope. When the
pipeline is placed into service, operating costs will be allocated to
Saddlehorn and Grand Mesa based on their proportionate ownership interest and
throughput.
“Combining projects makes
strong economic sense by reducing overall construction and operating costs and better
aligning pipeline capacity with current DJ Basin production while allowing for
future growth when market conditions improve,” said Michael Mears, Magellan’s
chief executive officer, on behalf of Saddlehorn.
Pipeline installation began
in early October for the Platteville-to-Cushing segment of the pipeline, which
is expected to be operational during mid-2016. Right-of-way acquisition is
currently in progress for the Carr-to-Platteville segment, which is expected to
be operational in the fourth quarter of 2016.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly
traded partnership that primarily transports, stores and distributes refined
petroleum products and crude oil. Magellan owns the longest refined petroleum
products pipeline system in the country, with access to nearly 50% of the
nation’s refining capacity, and can store more than 95 million barrels of
petroleum products such as gasoline, diesel fuel and crude oil. More
information is available at www.magellanlp.com.
About
Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. is
a publicly traded master limited partnership that owns and operates midstream
energy infrastructure and provides logistics services for crude oil, natural
gas liquids (“NGL”), natural gas and refined products. PAA owns an extensive
network of pipeline transportation, terminalling, storage and gathering assets
in key crude oil and NGL producing basins and transportation corridors and at
major market hubs in the United States and Canada. On average, PAA handles over
4.4 million barrels per day of crude oil and NGL on its pipelines. PAA is
headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.
About
Anadarko Petroleum Corporation
Anadarko Petroleum
Corporation's mission is to deliver a competitive and sustainable rate of
return to shareholders by exploring for, acquiring and developing oil and
natural gas resources vital to the world's health and welfare. As of year-end
2014, the company had approximately 2.86 billion barrels-equivalent of proved
reserves, making it one of the world's largest independent exploration and
production companies. For more information about Anadarko and APC Flash Feed
updates, please visit www.anadarko.com.
About
NGL Energy Partners LP
NGL Energy Partners LP is a Delaware
limited partnership. NGL owns and operates a vertically integrated energy
business with five primary segments: water solutions, crude oil logistics, NGL
logistics, refined products, renewable fuels and retail propane. More
information is available at www.nglenergypartners.com.
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Portions of this document constitute
forward-looking statements as defined by federal law. Although management of
Anadarko Petroleum Corporation, Magellan Midstream Partners, L.P., NGL Energy
Partners LP and Plains All American Pipeline, L.P. (the “companies”) believe
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 associated with the project that may have a direct impact on
Saddlehorn’s, Grand Mesa’s and the companies’ results of operations and
financial condition are: (1) the ability to obtain all required rights-of-way,
permits and other governmental approvals on a timely basis; (2) the ability to
complete construction of the project on time and at expected costs; (3) price
fluctuations and overall demand for crude oil; (4) changes in Saddlehorn’s and
Grand Mesa’s tariff rates or other terms imposed by state or federal regulatory
agencies; (5) the occurrence of an operational hazard or unforeseen
interruption; (6) disruption in the debt and equity markets that negatively
impacts Saddlehorn’s, Grand Mesa’s or the companies’ abilities to finance
capital spending and (7) willingness to incur or failure of customers or
vendors to meet or continue contractual obligations related to the project.
Additional information about issues that could lead to material changes in
performance is contained in filings with the Securities and Exchange Commission
for all companies. The companies undertake no obligation to revise these
forward-looking statements to reflect events or circumstances occurring after
today's date.
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