* Line to be built to handle 225,000 bpd
* Increased capacity is fully committed
By Janet McGurty
NEW YORK, March 15 Magellan Midstream
Partners LP said it will increase the capacity of its
planned oil pipeline carrying crude from west Texas oilfields
down to Houston and refineries along the U.S. Gulf Coast due to
strong shipper commitment.
The Crane-to-Houston pipeline is one of several projects on
the books for various companies that will help move crude out of
the oversupplied oil hub in Cushing, Oklahoma down the nation's
largest refinery concentration along the U.S. Gulf Coast.
Magellan's line will be built to handle 225,000 barrels per
day rather than the initially planned capacity of 135,000 bpd.
"The market clearly confirmed the attractive fundamentals of
our Crane-to-Houston crude oil pipeline, and we are pleased to
increase the scope of our project in response to this strong
industry demand," said Michael Mears, Magellan chief executive.
He said the pipe will offer a direct, cost-efficient route
to deliver growing west Texas crude production to refineries in
Houston and Texas City and provide a transportation option that
helps alleviate crude oversupply in Cushing.
That glut has depressed the price of the U.S. crude
benchmark, West Texas Intermediate.
Oil production from the mature fields of west Texas has
increased due to new drilling technologies developed in the
tight shale oil plays.
The project includes a reversal of the pipeline from Crane
to Magellan's east Texas terminal.
The cost of the project is now $375 million. The pipeline is
expected to start at partial capacity in early 2013, reaching
225,000 bpd by mid-year, based on receiving necessary regulatory
permits and approvals.
Magellan said it was still assessing construction of a new
pipeline segment using existing third-party line to carry oil
from Midland to Crane. The company estimates the cost at $70