Magellan Midstream Partners is commissioning its 50,000 b/d condensate splitter in Corpus Christi, Texas.
The $300mn splitter should be commercially operational late in the fourth quarter, the company said today while discussing third quarter earnings.
"The facility is mechanically complete and we are in the midst of commissioning the splitter over the coming weeks," said chief executive Michael Mears.
A condensate splitter breaks down ultralight oil into naphtha, diesel and other products. Magellan also said it is interested in buying a crude gathering system in the Permian basin, but has not found the right assets so far.
A gathering system would help the company boost the competitiveness of its 275,000 b/d Longhorn pipeline and its 300,000 b/d BridgeTex pipeline which move crude from the Permian basin to the Gulf coast.
The company is making investments on both pipelines to be able to batch condensate as a separate grade. Magellan said earlier this year that Longhorn would have three streams — West Texas Intermediate (WTI), West Texas Sour (WTS) and condensate.
Magellan is also considering forming a marketing arm to serve producers that may not want to ship crude in their own name. The service would involve transporting crude from the wellhead to the long-haul pipes.
"I'm not talking about a book trading business or anything like that but more of a pure marketing business," Mears said.
Magellan will move forward with an expansion of its Saddlehorn crude pipeline into Wyoming after a successful open season.
The company started operations on Saddlehorn from Platteville, Colorado, to Cushing, Oklahoma, in August, offering 190,000 b/d of capacity. An extension of the Saddlehorn system from Carr, Colorado, to Platteville is expected to be complete by the end of the year.
The new extension will expand the line into Laramie county, Wyoming. Magellan is planning to build a 10-mile pipeline in that county that will connect to an existing terminal and line owned by Plains All American Pipeline.
Saddlehorn last year was combined with another project in the region, NGL Energy Partners' Grand Mesa pipeline, to save construction and operating costs.
Magellan said its terminals in the southeast had supply issues during a 13-day outage in September on Colonial Pipeline which cost them less than $1mn. Colonial is a 5,500-mile (8,851km) products pipeline network.
Colonial is experiencing another shut down after a nine-person crew working for the pipeline on 31 October struck its Line 1 with a trackhoe, releasing and igniting gasoline. One contractor was killed and five others were wounded.
Magellan said the impact to fuel supply will not be significant if Colonial puts Line 1 back in service this weekend as planned.
Colonial today maintained plans to resume service on Line 1 at noon on 5 November, "though that is based upon certain assumptions that may change as we move forward," the pipeline said in a notice to shippers.
