The company said that it will transport at least 20,000 barrels per day of refined petroleum products under a 12.5-year take-or-pay agreement to El Paso, Texas beginning in late third quarter or early fourth quarter of 2010.
The product will subsequently be delivered to Juarez, Mexico via a newly-constructed third-party pipeline that connects to Magellan’s El Paso, Texas terminal.
Don Wellendorf, CEO of Magellan Midstream, said: “Regardless of whether we retain this system solely in refined products service or convert a portion to crude oil transportation, we believe this pipeline will play a key role in the transport of petroleum products in the Southwestern US and to neighboring markets in Northern Mexico.”
In addition, Magellan plans to build an additional 1.5 million barrels of refined petroleum products storage at its Galena Park, Texas marine terminal. Of this new storage, 0.8 million barrels will be jointly owned with a third party.
Magellan also will make improvements to increase the capacity at its existing terminal docks. The storage and dock construction projects are expected to be operational beginning late 2012, with Magellan’s portion of the cost expected to be approximately $65m.
