A wholly owned subsidiary of Anadarko Petroleum Corp. (NYSE: APC) has exercised its option to purchase a 20% equity interest in Saddlehorn Pipeline Co. As a result, the equity ownership in Saddlehorn will be Magellan Midstream Partners (NYSE: MMP), 40%; Plains All American Pipeline LP (NYSE: PAA), 40%; and Anadarko, 20%.
Saddlehorn is a limited liability company that will construct, own, and operate the Saddlehorn pipeline, a 550-mile pipeline that will transport various grades of crude oil from the Denver-Julesburg Basin, and potentially the broader Rocky Mountain area resource plays, to storage facilities in Cushing, Oklahoma, owned by Magellan and Plains. The 20-inch pipeline will have an ultimate capacity to transport up to 400,000 barrels per day (bpd), but the initial capacity of the Saddlehorn pipeline is expected to be closer to 200,000 bpd.
An extension to Carr, Colorado, is also under consideration for connection to existing crude oil assets owned by Plains in that region. This lateral is being designed to provide additional shippers with flexible options and streamlined access into the Saddlehorn system.
The project is estimated to cost between $800 million and $850 million. Magellan will serve as construction manager and pipeline operator of the Saddlehorn system. Subject to receipt of necessary permits and regulatory approvals, the Saddlehorn pipeline is expected to be operational during mid-2016.