Magellan Midstream to expand Texas refined petroleum products pipeline system

Magellan Midstream Partners LP (NYSE: MMP) plans to expand its refined petroleum products pipeline system to handle incremental demand for transportation of gasoline, diesel fuel, and jet fuel to central and north Texas markets.

Supported by long-term customer commitments, Magellan plans to build an approximately 135-mile, 16-inch pipeline from its terminal in East Houston to Hearne, Texas. Magellan will own the newly-constructed pipeline from East Houston to Hearne via an undivided joint interest agreement with Valero Energy Corp. (NYSE: VLO). Magellan's ownership interest in this new pipe will provide the ability to deliver additional product north to Temple, Waco, and Dallas as well as Magellan's Midcontinent markets, including Little Rock, Arkansas. Magellan plans to reverse an existing pipeline which will connect to the new pipeline segment, providing Magellan an incremental 85,000 barrels per day of refined products capacity originating from the Houston area, for an increase of nearly 50% to service Magellan's Texas, Midcontinent and Little Rock markets.

In addition, Magellan will make a number of enhancements to its existing pipeline and terminal infrastructure, including construction of 1 million barrels of refined products storage on a combined basis at its facilities in Dallas, East Houston and Hearne, and additional connections to third-party refineries, pipelines and terminals within the Houston Gulf Coast region, including Magellan's new Pasadena, Texas marine terminal that is currently under construction and expected to be operational in early 2019.

Magellan currently expects to spend approximately $375 million for its share of the project, with the expanded capacity available in mid-2019, subject to receipt of necessary permits and regulatory approvals.

If warranted by additional customer demand, Magellan's pipeline capacity originating in the Houston area could be further increased.

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