HOUSTON — TransCanada affirmed Wednesday plans to link the terminus of its 2,000 mile, cross-country crude oil pipelines to a partner’s network of pipelines that serve refineries in Houston and beyond.
The link, first proposed in April 2015, will be accomplished with a relatively small, nine mile, 24-inch diameter pipe at a cost of $50 million.
But the potential impact for the two companies could be larger — the hookup will allow crude shipped on TransCanada’s international Keystone system to access the refineries connected to Magellan Midstream Partners’ Houston and Texas City oil pipelines.
Calgary-based TransCanada’s flagship oil pipeline system begins in Alberta and ferries oil sands crude along its Keystone route south through the American Midwest to the Texas Gulf Coast at Port Arthur. The proposed Keystone XL would expand capacity by offering an alternative route to the northernmost, Hardisty, Alberta to Steele City, Nebraska route already served by an older TransCanada line.
TransCanada is currently building the Houston lateral, which will add a second terminus and about 700,000 barrels of storage in Houston to the southernmost part of the Keystone line. The project was originally slated for completion in the fourth quarter of 2015 before rain and flooding delays pushed the schedule back to the second quarter of 2016, Mark Cooper, a spokesman for TransCanada, said in an email Wednesday.
The so-called HoustonLink pipeline will connect to TransCanada’s Houston Lateral. The HoustonLink pipeline is expected to be completed in the fist half of 2017 and will be built and operated by Tulsa-based Magellan.
Magellan Midstream mostly owns refined products pipes and terminals, but the company has made crude oil a larger share of its business in recent years. Two of its largest pipelines, the 300,000 barrel per day BridgeTex joint venture and the 275,000 barrel per day Longhorn pipeline, bring Permian Basin oil across Texas into Houston.
More importantly to TransCanada, Magellan owns an East Houston terminal that’s connected to its 100-mile Houston-area distribution system that serves the city’s refineries and others in Texas City. The company also has an outlet to the Gulf of Mexico and connections to a third-party line that runs east to refineries in Louisiana — options that could be interesting to shippers moving oil on TransCanada’s network.
Shares of TransCanada Corp. traded down five cents to $31.52 on the New York Stock Exchange Wednesday amid a wider oil and gas rout. Units of Magellan Midstream Partners fell by $1.48 to $65.19.