The project would include the construction of a 14 km, 24 inch diameter pipeline, in which Magellan and TransCanada would have a 50/50 ownership interest. The project would give TransCanada’s Keystone and Marketlink shippers access to Magellan’s Houston and Texas City crude oil distribution system.
The joint project is estimated to cost approximately $US50 million. In addition, Magellan expects to develop additional infrastructure at its East Houston terminal to accommodate movements from the new pipeline. Magellan would serve as construction manager and operator of the pipeline.
Construction of TransCanada’s Houston tank terminal is expected to be completed in 2015.
The joint project is subject to the parties’ entry into mutually acceptable agreements and, pending the receipt of any necessary rights-of-way, permits and regulatory or other approvals, the pipeline is expected to be operational by late 2016.
“Magellan is excited about the prospect of further enhancing our crude oil connectivity in the Houston market,” said Magellan President and Chief Executive Officer Michael Mears.
“This connection would provide our customers with additional supply options for the Houston Gulf Coast refining region, with access to crude oil from the Cushing storage hub.”
TransCanada President and Chief Executive Officer Russ Girling said the project would allow the company to directly connect to key refineries in the Houston and Texas City area and would help to bolster North American energy security and independence.