March 2019, Vol. 246, No. 3

Projects

Magellan Cancels Plan for Short-Haul Oil Pipeline in West Texas

Magellan Cancels Plan for Short-Haul Oil Pipeline in West Texas  

Magellan Midstream Partners LP has canceled plans to develop a stand-alone crude pipeline in West Texas, the area of the nation’s top oil field as it considers a lower-cost project for the same region, an executive said.   

The Tulsa-based company plans to pursue a lower-cost project to meet shipper needs in an effort to be more capital efficient, its chief executive told investors on a conference call.  

“It would be a much, much lower capital investment, and it would be a much more efficient way for us to source barrels into Longhorn (pipeline) for our customers,” Magellan Chief Executive Michael Mears told Reuters.   

In 2017, Magellan estimated that the pipeline would cost $150 million. A write off of expenditures related to the project reduced fourth-quarter distributable cash flow by $9 million, an executive said on the call.  

The Tulsa, Okla.-based pipeline operator had said in 2017 it would build a 60-mile pipeline from Wink to Crane, Texas, to supply crude to its large, 275,000-bpd Longhorn crude pipeline. That line runs from the Permian Basin in West Texas to refining and export facilities in Houston.