Magellan Midstream purchases additional petroleum storage
Magellan Midstream Partners has completed its acquisition of 7.8 million barrels of crude oil storage and more than 100 miles of active petroleum pipelines from BP Pipelines (North America), Inc. for $289 million. In addition, Magellan will acquire certain crude oil tank working inventory at fair market value, which is currently estimated to be approximately $50 million.
“Completion of this acquisition substantially increases our presence in the crude oil storage and distribution business,” said Don Wellendorf, Magellan’s chief executive officer. “Initial industry feedback has been extremely positive, and we look forward to pursuing opportunities to enhance the utilization of these assets.”
Magellan also plans to construct an incremental 2.25 million barrels of crude oil storage in the crude oil hub of Cushing, Oklahoma, in conjunction with a private investor group. Combined with the initial 2 million barrels announced in May 2010, this crude oil construction project now totals 4.25 million barrels of storage, all supported by long-term customer contracts. Magellan will be the majority owner and operator of the storage, which is expected to be operational in phases beginning mid-2011, with the final tanks operational by the end of 2011.
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