Magellan partners in $820 million Houston Ship Channel project

Tulsa-based Magellan Midstream announced Thursday a partnership with Valero Energy Corp. to expand the size and scope of a marine storage facility under construction along the Houston Ship Channel in Pasadena, Texas.

The fuel storage facility will be owned by a limited liability company owned equally by Magellan and Valero and will initially include 5 million barrels of storage, truck loading facilities and two proprietary ship docks.

“Magellan is pleased to join forces with Valero to combine our extensive pipeline and terminals capabilities with their worldrenowned refining and marketing expertise to further expand the state-of-the-art marine facility being constructed in Pasadena,” Magellan CEO Michael Mears said in a statement.

“Demand for refined products from the Gulf Coast continues to grow, and together we are well-positioned to continue expanding our marine capabilities to meet this demand from both domestic and international markets.”

Magellan announced its original plans in July 2016 for a $335 million project to construct 1 million barrels of storage and a marine dock. That project, currently under construction, is now Phase 1 and will be jointly owned by the new company.

The expansion will include an incremental 4 million barrels of storage, a three-bay truck track and a second marine dock.

Once the expansion is complete, the Pasadena facility will be connected via pipeline to Valero’s refineries in Houston and Texas City and the Colonial and Explorer pipelines in addition to the already planned connection to Magellan’s Galena Park terminal facility.

The project, estimated to cost nearly $820 million, will be funded equally by both companies. Phase 1 is expected to be operational in early 2019, with Phase 2 expected to come online in early 2020.