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.
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