Tulsa,
OK and Houston, TX – Magellan Midstream Partners, L.P. (NYSE: MMP) (“Magellan”)
and Plains All American Pipeline, L.P. (NYSE: PAA) (“Plains”) announced today that
they have formed Saddlehorn Pipeline Company, a 50/50 limited liability
company, to construct, own and operate the Saddlehorn pipeline, an approximately
550-mile pipeline that will transport various grades of crude oil from the DJ
Basin, and potentially the broader Rocky Mountain area resource plays, to
storage facilities in Cushing, OK owned by Magellan and Plains. An extension to
Carr, CO is also under consideration for connection to existing crude oil
assets owned by Plains in that region.
“Magellan is pleased to
work with Plains on the Saddlehorn pipeline,” said Michael Mears, Magellan’s Chief
Executive Officer. “Aligning with Plains makes strategic sense due to their
significant marketing and pipeline presence in this region, adding further
value to the pipeline project to deliver crude oil to the Cushing hub.”
“Plains is excited to
partner with Magellan on the Saddlehorn pipeline project,” said Greg L.
Armstrong, Chairman and CEO of Plains All American. “The project is underpinned
by ship-or-pay contracts with major producers in the area that protect our
investment. Moreover, this arrangement provides us the opportunity to
realize meaningful upside to base level returns by shipping additional volumes
associated with PAA’s marketing activities in the region.”
The project is currently
estimated to cost between $800 million and $850 million. Magellan will serve as
construction manager and pipeline operator. Subject to receipt of necessary
permits and regulatory approvals, the Saddlehorn pipeline is expected to be
operational during mid-2016.
The open season for the
Saddlehorn pipeline is set to expire today, Feb. 27 at 5:00 p.m. Central Time.
As previously announced, binding commitments have been received from Noble
Energy, Inc. and a wholly owned subsidiary of Anadarko Petroleum Corporation
(“Anadarko”). In addition, Anadarko has an option to participate in equity
ownership up to 20% in Saddlehorn Pipeline Company. Anadarko’s option expires
approximately two weeks after the closing of the open season.
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. (NYSE: PAA) is a publicly traded
partnership that owns and operates midstream energy infrastructure and provides
logistics services for crude oil, natural gas liquids (“NGL”), natural gas and
refined products. Plains 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, Plains handles over 4.1 million barrels per day
of crude oil and NGL on its pipelines. More information is available at www.plainsallamerican.com.
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Portions of this document constitute
forward-looking statements as defined by federal law. Although management of
Magellan Midstream Partners, L.P. and Plains All American Pipeline, L.P.
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 the
partnerships’ 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 Pipeline’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 the partnerships’ 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 both
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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