Magellan Midstream Partners LP (NYSE: MMP) and LBC Tank Terminals LLC have formed a 50/50 limited liability company, Seabrook Logistics LLC, to own and operate crude oil storage and pipeline infrastructure in the Houston Gulf Coast area.
The assets to be constructed and owned by the joint venture (JV) include over 700,000 barrels of new crude oil storage and other distribution infrastructure adjacent to LBC's existing terminal in Seabrook, Texas. The JV will construct and own a new 18-inch-diameter pipeline that will connect the new storage to an existing third-party pipeline that will transport crude oil to a Houston-area refinery.
An agreement has also been executed to allow the JV to utilize LBC's dock suitable for industry-standard Aframax vessels with up to a 45-foot draft, along with two barge docks that will provide marine access with loading and unloading services at the Seabrook facility.
The project is estimated to cost $95 million, and is supported by a long-term storage and transportation commitment with a major refiner. Magellan will be responsible for constructing, maintaining, and operating the new pipeline, and LBC will be responsible for constructing, maintaining, and operating the new storage tanks and other terminal assets.
The new storage facility and pipeline infrastructure are expected to be operational in the first quarter of 2017.