Magellan Midstream Partners LP (NYSE: MMP) and TransCanada Corp. (NYSE: TRP) have entered into a joint development agreement to pursue a project to connect TransCanada's Houston tank terminal to Magellan's East Houston terminal.
The project would include the construction of a 9-mile, 24-inch-diameter pipeline, in which Magellan and TransCanada would have a 50/50 ownership interest. The project would give TransCanada's Keystone and Marketlink shippers access to Magellan's Houston and Texas City, Texas, crude oil distribution system.
Michael Mears, Magellan's president and CEO, commented that this connection would provide its customers with additional supply options for the Houston Gulf Coast refining region, with access to crude oil from the Cushing, Oklahoma, storage hub.
The joint project is estimated to cost approximately $50 million. In addition, Magellan would expect to develop additional infrastructure at its East Houston terminal to accommodate movements from the new pipeline. Magellan would serve as construction manager and operator of the pipeline. Construction of TransCanada's Houston tank terminal is expected to be completed in 2015.
The joint project is subject to the parties' entry into mutually acceptable agreements. Pending the receipt of any necessary rights-of-way, permits, and regulatory or other approvals, the pipeline would be expected to be operational by late 2016.