Pipeline operator Magellan Midstream Partners LPMMP is planning to shut part of its Magellan South refined products pipeline system for a period of two to four weeks. The portion to be closed spans over 200 miles in Texas. The news is as per a company spokesperson as reported by Reuters.
It is to be noted that the pipeline system primarily carries gasoline and diesel to Duncan, OK and to El Paso, TX from Gulf Coast refineries and storage facilities located in the Houston region.
The expected outage will most likely be to replace a part of the pipeline that was damaged by flood.
Most importantly, only 40% to 50% of record volumes will be supplied by the partnership during the pipeline's non-operational period that also through alternative methods. One of the ways might be trucking.
Tulsa, OK-based Magellan Midstream is a master limited partnership (MLP) that owns and operates a diversified portfolio of energy infrastructure assets. The partnership primarily transports, stores, and distributes refined petroleum products and, to a lesser extent, ammonia. We appreciate Magellan Midstream's investment grade credit rating as it will enable the partnership to draw capital from the market at a reasonable cost.
However, with the growing popularity of renewable sources of energy such as wind and solar, the partnership is now facing tough competition.
As a result, Magellan Midstream currently carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.
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