Pipeline operator Magellan Midstream Partners L.P. MMP announced that it has formed a joint venture (JV) with global provider of bulk liquid storage solutions – LBC Tank Terminals, LLC.
The 50-50 JV – Seabrook Logistics, LLC – will own and operate oil storage and pipeline assets in the Houston Gulf Coast region. The proposed assets include crude oil storage facilities with a capacity of over 700,000 barrels and distribution facilities near LBC’s Seabrook terminal. Additionally, the JV will build and own a pipeline that would connect the proposed storage facility with a third-party pipeline. This third-party pipeline will then carry the crude oil to a refinery in Houston.
Per an agreement, the JV would also receive access to LBC’s dock, which would facilitate efficient loading and unloading services at the Seabrook facility.
The partnership added that the project is estimated to cost about $95 million. The project has also secured long-term storage and transportation contracts from a refiner. While Magellan Midstream would construct and operate the proposed pipeline, LBC would be responsible for the storage facility.
The storage and pipeline assets are anticipated to commence operations in the first quarter of 2017, subject to permits and regulatory approvals.
Management at Magellan Midstream added that the contract is likely to generate additional growth opportunities through integration of the new facility into its oil and refined products pipeline system in Houston.
Currently, Magellan Midstream carries a Zacks Rank #3 (Hold).
Better-ranked players from the oil and gas production and pipeline industry include NuStar Energy L.P. NS, Buckeye Partners, L.P. BPL and Tesoro Logistics LP TLLP. While NuStar sports a Zacks Rank #1 (Strong Buy), Buckeye Partners and Tesoro Logistics hold a Zacks Rank #2 (Buy).
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