Magellan Midstream Partners, L.P. and Enterprise Products Partners L.P. announced Friday they have agreed to jointly develop a contract for the physical delivery of crude oil in the Houston area. “This decision comes in response to market interest for a Houston-based index with greater scale, flow assurance, and price transparency,” the companies declared.
According to the oil-firms, quality specifications will be consistent with a West Texas Intermediate (“WTI”).
Possibly of your interest: Sungrow to provide 100 MW energy storage to Chisholm Grid in Texas
Magellan and Enterprise: new agreement
This Friday, Magellan Midstream Partners and Enterprise Products Partners announced they have agreed to jointly develop through their affiliates a contract for oil delivery activities in the Houston area. The agreement comes in response to both companies’ interest in a Houston-based index with greater scale, transparency, and flow assurance.
Magellan and Enterprise declared the agreement’s quality specifications would be consistent with a West Texas Intermediate (“WTI”) from the Permian Basin. This intermediate will have delivery capacities in Magellan’s East Houston terminal and Enterprise’s ECHO terminal in Houston.
“The industry-recognized quality and consistency of Midland WTI crude oil at Magellan’s East Houston terminal, combined with flexible and reliable market access offered by both Magellan and Enterprise, make this joint effort a logical advancement for crude oil futures to provide added value for our customers, both domestically and globally,” said Michael Mears, Magellan’s chief executive officer.
“We are pleased to join with Magellan on this initiative, which will provide customers with enhanced flexibility, connectivity, market access, and price transparency for their physical barrels of crude oil,” said A.J. “Jim” Teague, co-chief executive officer of Enterprise’s general partner.
The companies’ expectations
“This project will leverage the strengths of two major midstream infrastructure systems, featuring five pipelines serving the Permian Basin capable of delivering 2 million barrels per day of crude oil into the Houston market, a robust Gulf Coast storage position, connectivity to every refinery in the Houston area, and access to the largest network of crude oil export terminals located along the Houston Ship Channel,” added Teague.
Magellan Midstream Partners is a publicly-traded partnership that primarily transports, stores, and distributes refined petroleum products and crude oil.
The company owns the most comprehensive refined petroleum products pipeline system in the country, with access to nearly 50% of the nation’s refining capacity. Magellan has a storage capacity of more than 100 million barrels of petroleum products, including gasoline, diesel fuel, and crude oil.
Enterprise Products Partners is one of the most extensively traded partnerships and a leading North American provider of midstream energy services.
The company’s services include: natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage and export, and import terminals; crude oil gathering, transportation, storage and export, and import terminals; petrochemical and refined products transportation, storage, export and import terminals and related services; and a marine transportation business that operates primarily on the United States inland and Intracoastal Waterway systems.
The partnership’s assets include approximately 50,000 miles of pipelines; 260 million barrels of storage capacity for NGLs, crude oil, refined products, and petrochemicals; and 14 Bcf of natural gas storage capacity.