Magellan Midstream Partners, L.P. (ticker: MMP) announced this week that it will build a 60-mile, 24-inch pipeline that connects Wink and Crane, TX. The pipeline’s price tag will be approximately $150,000,000. The pipeline should be operational midway through 2019, the company said in a press release.
The new pipeline will serve direct service from the Delaware basin to the Crane origin of the Longhorn Pipeline, which runs from Crane to Houston. The pipeline will be initially constructed to handle 250,000 BPD and can carry up to 600,000 BPD as industry demand increases.
In addition to creating access from the Delaware basin to the Longhorn pipeline, the pipeline will also provide service for oil and condensate producers from the Delaware basin to Corpus Christi. Magellan will conduct an open season to gain shipper interest levels and contracts, but the construction of the pipeline will not depend on the results from the open season.
The Delaware basin consists of 15 potential target formations stacked up to 2,000 feet thick. Because of the stacked formations, one well has the potential to have production rates comparable to four wells in other basins. The Delaware basin is projected to be an active formation for multiple decades, which would lead to sustained demand for additional pipelines.
Source: Magellan Midstream
