Magellan, PAA form Saddlehorn crude pipeline joint venture

Magellan Midstream Partners LP and Plains All American Pipeline LP have formed Saddlehorn Pipeline Co., a 50-50 limited liability joint venture, to build, own, and operate the 550-mile Saddlehorn pipeline, shipping crude oil from the Denver-Julesburg basin, and potentially the broader Rocky Mountain area, to storage in Cushing, Okla.

Magellan Midstream Partners LP and Plains All American Pipeline LP have formed Saddlehorn Pipeline Co., a 50-50 limited liability joint venture, to build, own, and operate the 550-mile Saddlehorn pipeline, shipping crude oil from the Denver-Julesburg basin, and potentially the broader Rocky Mountain area, to storage in Cushing, Okla. The companies are also considering extending Saddlehorn to Carr, Colo., to access existing PAA-owned crude pipelines.

Magellan will build and operate Saddlehorn. As originally proposed by Magellan last year, the pipeline will have a 20-in. OD and ship as much as 400,000 b/d (OGJ Online, Sept. 24, 2014). The two companies expect it to enter service mid-2016 at a cost as high $850 million.

Binding commitments from Noble Energy Inc. and a wholly owned subsidiary of Anadarko Petroleum Corp. underpin the project. Anadarko has an option, which expires in 2 weeks, to buy as much as 20% of Saddlehorn.

PAA and Magellan became partners in the Permian-to-Houston BridgeTex crude pipeline last year when PAA bought Occidental Petroleum Corp.’s 50% interest (OGJ Online, Nov. 6, 2014).

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