January 24, 2019 / 4:45 PM / 6 months ago

CORRECTED-UPDATE 2-Magellan eyes Freeport, Texas as spot for crude export terminal

(In Jan. 24 story, corrects second paragraph to show Roles' title is vice president, not senior vice president)

HOUSTON, Jan 24 (Reuters) - Magellan Midstream Partners LP has begun talks with companies developing crude transportation assets in Freeport, Texas, as it considers building a U.S. crude export terminal there instead of its previously planned spot off Corpus Christi, an executive said on Thursday.

The Houston pipeline operator is still actively exploring the construction of an inland exporting facility on a harbor island off Corpus Christi, but has begun considering "all of our options," including an offshore terminal off Freeport, closer to its crude storage and terminal assets in Houston, said Mark Roles, a vice president at Magellan.

"Barrels from pretty much every basin in the U.S. come through Houston so you can get a variety of grades, which is good for international buyers," Roles said on the sidelines of the Argus Americas Crude Summit in Houston.

That Magellan is considering Freeport adds a new wrinkle to the race to build U.S. export terminals capable of loading crude onto supertankers. The company had followed global commodities trader Trafigura SA and investor Carlyle Group in making plans for export terminals off Corpus Christi.

A Freeport facility would put Magellan in competition with Enbridge Inc, Kinder Morgan Inc and Oiltanking Partners LP, which have jointly proposed an offshore facility that would load 2 million barrels per day (bpd) onto supertankers 80 miles off Freeport.

Magellan's potential Corpus Christi terminal would be capable of loading as much as 1.5 million bpd onto supertankers and would have room for up to 20 million barrels of storage capacity, Magellan told Reuters.

The Houston pipeline operator owns a terminal in Corpus Christi's inner harbor, as well as other undeveloped property that could be used for additional storage tanks to connect to the terminal.

It is in talks with potential customers about the terminal, and has also held discussions about building pipelines between Houston and Corpus Christi and from the U.S. oil storage hub in Cushing, Oklahoma to Houston, the company said.

But the oil flowing to Corpus Christi comes almost exclusively from Texas fields in the Permian Basin and the Eagle Ford Shale, while Freeport pipelines have connections to the U.S. oil storage hub in Cushing, Oklahoma, which holds crude from a variety of basins around the United States, Roles said.

"With all the politics involved, the permitting, I don't believe more than two of these are going to get built," Roles said. "We want to be on one that's successful and has long-term commitments on it." (Reporting by Collin Eaton Editing by James Dalgleish)

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