Magellan Midstream and LBC Tank Terminals Form 50/50 Joint Venture to Build Terminal and Pipeline Infrastructure on the Houston Gulf Coast
Tulsa, OK and Mechelen, Belgium – Magellan Midstream Partners, L.P. (NYSE: MMP) (“Magellan”) and LBC Tank Terminals, LLC (“LBC”) announced today that they have formed a 50/50 limited liability company Seabrook Logistics, LLC (“JV”), to own and operate crude oil storage and pipeline infrastructure in the Houston Gulf Coast area.
The assets to be constructed and owned by the JV include over 700,000 barrels of new crude oil storage and other distribution infrastructure located adjacent to LBC’s existing terminal in Seabrook, TX. In addition, the JV will construct and own a new 18-inch diameter pipeline, which will connect the new storage to an existing third party pipeline that will transport crude oil to a Houston-area refinery. An agreement has also been executed to allow the JV to utilize LBC’s dock suitable for industry standard Aframax vessels with up to a 45-foot draft and two barge docks, which will provide efficient marine access with flexible loading and unloading services at the Seabrook facility.
“Magellan is excited about developing a new project with LBC in the Houston market to provide a cost efficient and reliable option to store, transport and distribute crude oil along the Gulf Coast,” said Michael Mears, Magellan’s president and chief executive officer. “We also see growth opportunities at this new facility through the potential connection and integration of this terminal into Magellan’s Houston crude oil and refined products pipeline systems.”
“LBC is pleased to enter into this joint venture with Magellan. This expansion of our Houston area terminal is an important step in LBC’s growth strategy,” said Walter Wattenbergh, LBC’s chief executive officer. “We look forward to executing this project as a part of our expansion plans in the crude and refined products markets in the U.S.”
The project is currently estimated to cost approximately $95 million and is supported by a long-term storage and transportation commitment with a major refiner. Magellan will be responsible for constructing, maintaining and operating the new pipeline, and LBC will be responsible for constructing, maintaining and operating the new storage tanks and other terminal assets.
Subject to the receipt of permits and regulatory approvals, the new storage facility and pipeline infrastructure are expected to be operational in the first quarter of 2017.
Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation’s refining capacity, and can store more than 95 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. and LBC Tank Terminals, LLC believe any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Among the key risk factors associated with the project that may have a direct impact on its operating and financial results are: (1) the ability to obtain all required rights-of-way, permits and regulatory or other approvals on a timely basis; (2) price fluctuations and overall demand for crude oil and refined products; (3) changes in tariff rates or other terms imposed by state or federal regulatory agencies; (4) the occurrence of an operational hazard or unforeseen interruption; and (5) willingness to incur or failure of customers or vendors to meet or continue contractual obligations. Additional information about issues that could lead to material changes in performance is contained in Magellan’s filings with the Securities and Exchange Commission. The companies undertake no obligation to revise these forward-looking statements to reflect events or circumstances occurring after today’s date.