Magellan Midstream Partners, L.P. and Enterprise Products Partners L.P. today announced that affiliates of the two companies have entered into an agreement to jointly develop a futures contract for the physical delivery of crude oil in the Houston area in response to market interest for a Houston-based index with greater scale, flow assurance and price transparency. The quality specifications will be consistent with a West Texas Intermediate (“WTI”) crude oil originating from the Permian Basin with delivery capabilities at either Magellan’s East Houston terminal or Enterprise’s ECHO terminal in Houston.
“The industry-recognized quality and consistency of Midland WTI crude oil at Magellan’s East Houston terminal, combined with flexible and reliable market access offered by both Magellan and Enterprise, make this joint effort a logical advancement for crude oil futures to provide added value for our customers, both domestically and globally,” said Michael Mears, Magellan’s chief executive officer.
“We are pleased to join with Magellan on this initiative, which will provide customers with enhanced flexibility, connectivity, market access and price transparency for their physical barrels of crude oil,” said A.J. “Jim” Teague, co-chief executive officer of Enterprise’s general partner. “This project will leverage the strengths of two major midstream infrastructure systems, featuring five pipelines serving the Permian Basin capable of delivering 2 million barrels per day of crude oil into the Houston market (with the potential for third-party pipelines to double the capacity of Permian Basin crude oil into the market), a robust Gulf Coast storage position, redundant connectivity to every refinery in the Houston area, and access to the largest network of crude oil export terminals located along the Houston Ship Channel.”
