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Magellan and Plains form Saddlehorn Pipeline Company

Magellan Midstream and Plains All American to build Saddlehorn Pipeline
Magellan and Plains form Saddlehorn Pipeline Company

Magellan Midstream Partners and Plains All American Pipeline (Plains) have formed the Saddlehorn Pipeline Company to construct, own and operate the 550 mi. Saddlehorn pipeline. The pipeline will transport various grades of crude oil from the DJ Basin, and potentially the broader Rocky Mountain area resource plays, to storage facilities in Cushing, OK owned by Magellan and Plains.

"Magellan is pleased to work with Plains on the Saddlehorn pipeline," said Michael Mears, Magellan's CEO. "Aligning with Plains makes strategic sense due to their significant marketing and pipeline presence in this region, adding further value to the pipeline project to deliver crude oil to the Cushing hub."

"Plains is excited to partner with Magellan on the Saddlehorn pipeline project," said Greg L. Armstrong, Chairman and CEO of Plains All American. "The project is underpinned by ship-or-pay contracts with major producers in the area that protect our investment. Moreover, this arrangement provides us the opportunity to realize meaningful upside to base level returns by shipping additional volumes associated with PAA's marketing activities in the region."

The project is currently estimated to cost between US$800 million and $850 million. Magellan will serve as construction manager and pipeline operator. Subject to receipt of necessary permits and regulatory approvals, the Saddlehorn pipeline is expected to be operational during mid-2016.

The open season for the Saddlehorn pipeline is set to expire today, 27 February 2015 at 5:00 p.m. Central Time. As previously announced, binding commitments have been received from Noble Energy, Inc. and a wholly owned subsidiary of Anadarko. In addition, Anadarko has an option to participate in equity ownership up to 20% in Saddlehorn Pipeline Company. Anadarko's option expires approximately two weeks after the closing of the open season.

Image from Plains All American Pipeline

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