Magellan on track to reverse Texas oil line

* Company to decide on reversal in two months

* Reversal can alleviate Cushing supply glut

* Line to carry 200,000 bpd of oil to Houston refineries

* Pipeline could be up in 18-24 months after decision

NEW YORK, March 16 (Reuters) - Magellan Midstream Partners (MMP.N) said Wednesday it was undertaking permitting and final engineering work for the potential reversal of a Texan oil line that will relieve the supply glut at the Cushing, Oklahoma storage hub.

Magellan said it expects to decide within the next two months on the reversal of the 18-inch (0.457 meter) Houston-to-El Paso Longhorn pipeline.

The pipeline will have potential to carry up to 200,000 barrels a day of West Texas Permian basin crude to Houston area refineries, possibly diverting crude that would have been destined to Cushing.

It can be online in 18-24 months once Magellan decides.

"Recent market dynamics continue to favor the reversal and conversion of Magellan's Houston-to-El Paso pipeline to crude oil service as new outlets for West Texas crude oil are sought by producers," said Mike Mears, Magellan CEO.

The plan would reverse and convert a refined products pipeline segment from Crane, Texas to Houston, to transport crude from West Texas to East Houston terminal. Nearby pipeline infrastructure would still carry 60,000 bpd of refined products to the El Paso market.

Magellan Midstream Partners revised the cost of the project to $330 million in February this year from the $150 million it had estimated in late July 2010. (Reporting by Selam Gebrekidan; Editing by John Picinich)