(Reuters) - Magellan Midstream Partners LP has canceled plans to develop a stand-alone crude pipeline West Texas, the area of the nation’s top oil field as it considers a lower-cost project for the same region, an executive said on Thursday.
The Tulsa-based company plans to pursue a lower-cost project to meet shipper needs in an effort to be more capital efficient, its chief executive told investors on a conference call.
“It would be a much, much lower capital investment, and it would be a much more efficient way for us to source barrels into Longhorn (pipeline) for our customers,” Magellan Chief Executive Michael Mears said.
In 2017, Magellan estimated that the pipeline would cost $150 million. A write off of expenditures related to the project reduced fourth-quarter distributable cash flow by $9 million, an executive said on the call.
The Tulsa, Oklahoma-based pipeline operator had said in 2017 it would build a 60-mile pipeline from Wink to Crane, Texas to supply crude to its large, 275,000-barrel-per-day Longhorn crude pipeline. That line runs from the Permian Basin in West Texas to refining and export facilities in Houston.
Reporting by Collin Eaton; Editing by David Gregorio