Tuesday, December 18, 2012

RBN: Tectonic Changes in Storage and Distribution of US Energy

Unless I missed them, I did not see any wells coming off the confidential list today.

RBN Energy: a look at Magellan Midstream Partners; the company has a leading position in crude storage and distribution in:
  • Cushing
  • Houston
  • Corpus Christi
Coming on line in the near future:
  • the Longhorn Reversal project, first phase, initial, 75K bbls/day; from Crane in the Permian Basin to Houson (early 2013)
  • the Seaway pipeline from Cushing to Houston wil expand from 150K to 140K bbls/day (early 2013)
  • the Double Eagle Pipeline in South Texas to start delivering 100K bbls/day of condensate to Corpus Christi
Magellan Midstream Partners assets were originally part of Williams Energy network.
Just two years ago, Magellan could comfortably have been described as a refined products distribution company with a network of 50 terminals and 9600 miles of pipelines stretching through the center of the US from Grand Forks, ND to Houston, TX
During 2011 about 77 percent of the company’s operating margin came from the refined products pipeline system. 
In 2010 however, Magellan made a strategic purchase from BP of 7.8 MMBbl of crude oil storage in Cushing, OK as well as pipelines linking several refineries in Houston and Texas City. Since that asset purchase, Magellan’s has concentrated its expansion investment on crude oil storage and distribution. By the end of 3Q2012 Magellan’s crude assets still only represented 10 percent of the company’s operating margin but 85 percent of their $1.3 B expansion budget is devoted to expanding these crude oil assets.

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