A wholly-owned subsidiary of Anadarko purchased a 20% equity interest in the Saddlehorn Pipeline Project
Magellan Midstream Partners (ticker: MMP) and Plains All American Pipeline (ticker: PAA) announced today that a wholly owned subsidiary of Anadarko Petroleum (ticker: APC) exercised its option to purchase a 20% equity interest in Saddlehorn Pipeline Company. MMP and PAA will each have 40%equity ownership in Saddlehorn, according to a company press release.
The pipeline was initially announced on February 27 when Magellan and Plains formed Saddlehorn Pipeline Company, a 50/50 limited liability company between Magellan and Plains, which will construct, own and operate the pipeline. The pipeline is approximately 550 miles and will transport various grades of crude oil from the DJ Basin, with potential to transport from the broader Rocky Mountain area resource plays, to storage facilities in Cushing, Oklahoma. The 20-inch pipeline will have an ultimate capacity to transport up to 400 MBOPD, but the initial capacity of the pipeline is expected to be about half of that at 200 MBOPD.
An extension to Carr, Colorado is also under consideration for connection to existing crude oil assets owned by Plains in that region. This lateral is being designed to provide additional shippers with flexible options and streamlined access into the Saddlehorn system.
“Anadarko is a committed shipper and has a significant production presence in this region, adding further value to the pipeline projects to deliver crude oil to the Cushing hub,” said Michael Mears, Magellan’s CEO and Greg Armstrong, Chairman and CEO of Plains. Anadarko increased its Wattenberg Field production volumes by 55% on a year-over-year basis in 2014, amounting to an average of nearly 170 MBOEPD. The company was also active on the infrastructure front, adding a cryogenic plant, NGL pipeline and more than 300 MMcf/d of compression.
The project is currently estimated to cost $800 to $850 million. Magellan will serve as construction manager and pipeline operator of the Saddlehorn system. Subject to receipt of necessary permits and regulatory approvals, operations are expected to begin by mid-2016.
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication.