MMP’s Marine Storage segment
Magellan Midstream Partners (MMP) expects its Marine Storage segment’s operating income to rise 11% to $132 million in 2018. The segment has five storage facilities with storage capacity of 26 million barrels and 1.4 million bpd (barrels per day) of dock capacity.
The segment’s storage utilization rates have historically been higher than 90%. The Marine Storage segment generated ~8% of MMP’s 2017 operating income.
As the graph above shows, ~4% of the segment’s storage in 2018 is expected to be affected by maintenance work, and ~2% is expected to be affected by repairs related to the impact of Hurricane Harvey.
MMP’s Marine Storage segment generated ~85% of its revenue from committed storage, for which customers are obligated to pay irrespective of usage. Other fee-based activities include throughput and services such as heating and mixing.
Magellan Midstream’s Galena Park and Corpus Christi facilities are the segment’s key storage facilities. The Galena Park facility has 14 million barrels of storage and 550,000 bpd of dock capacity. A fifth dock is expected to become operational by the end of 2018, increasing capacity to 750,000 bpd.
The Corpus Christi marine storage facility, shown in the image above, has 2 million barrels of refined product storage and 100,000 bpd of dock capacity.
Pasadena marine terminal
Magellan Midstream Partners is developing a marine terminal in Pasadena, Texas, in a 50-50 joint venture with Valero Energy (VLO). With 1 million barrels of storage, Phase 1 of the terminal is expected to be operational in early 2019. With 4 million barrels of storage, Phase 2 is expected to become operational in early 2020.
Magellan Midstream’s share of capital expenditure for the project is $410 million. The project, fully supported by long-term contracts, has an expected EBITDA (earnings before interest, tax, depreciation, and amortization) multiple of 9x.
Next, let’s analyze Magellan Midstream’s Crude Oil segment’s performance.