Valero, Magellan Midstream to Jointly Expand Pasadena Unit

Independent refinerValero Energy VLO has entered into a joint venture (JV) with energy infrastructure provider Magellan Midstream Partners, L.P. MMP for the expansion of the Pasadena marine storage facility.

It is to be noted that a limited liability firm – jointly owned by Valero and Magellan Midstream – will own the storage unit. The terminal is expected to store diesel, gasoline of varying grades, renewable fuels and jet fuel.

Phase One

Phase one of the terminal project, slated to commence operation by the first half of 2019, is presently under construction and is expected to comprise storage unit with capacity to store 1 million barrels of liquid. The terminal will also include a new marine dock that will be able to accommodate Panamax-sized ships.

Phase Two

The phase two of the project is expected to expand the storage capacity by another 4 million barrels. Another marine dock will be added which will be able to handle Aframax-sized vessels. The Phase two will initiate operation by early 2020.

Total Cost

Total cost estimated by the JV players for both the phases of development stands at $820 million. Both Valero and Magellan Midstream, likely be the operator of the storage plant, will finance the project.

After completion, the storage facility will be linked with key pipelines and refineries. These include the Houston refinery of Valero and Galena Park terminal of Magellan Midstream.

Magellan Midstream added that with this project, the JV will be able to meet the growing demand for refined petroleum products from the U.S. gulf coast.

Stock Performance

San Antonio, TX-based Valero is the largest independent refiner and marketer of petroleum products in the United States. The company has gained 23.3% over the past year, outperforming the industry’s 9.3% gain.

 

Tulsa, OK-based Magellan Midstream is a master limited partnership (MLP) that owns and operates a diversified portfolio of energy infrastructure assets. Units of the partnership increased 5.2% against the industry’s 7.1% decline.

 

Zacks Rank & Key Picks

Both Valero and Magellan Midstream carry a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector are TransCanada Corporation TRP and Transmontaigne Partners LP TLP. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Calgary, Canada, TransCanada is a midstream energy firm in North America. The company posted an average positive earnings surprise of 4.06% over the last four quarters.

Transmontaigne, headquartered in Denver, CO, is involved in the transportation and storage of refined petroleum products. The firm recorded an average positive earnings surprise of 6.60% over the last four quarters.

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Magellan Midstream Partners L.P. (MMP) : Free Stock Analysis Report
 
Valero Energy Corporation (VLO) : Free Stock Analysis Report
 
TransMontaigne Partners L.P. (TLP) : Free Stock Analysis Report
 
TransCanada Corporation (TRP) : Free Stock Analysis Report
 
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