Magellan Midstream to decommission ammonia pipeline

Magellan Midstream will decommission its 1,100-mile Texas to upper Midwest ammonia pipeline system later this year, citing low margins, high operating costs and potentially lower ammonia supplies.

Magellan started the decommissioning process during the fourth quarter, the company announced during its quarterly earnings call today.

Magellan chief executive Michael Mears said the company has considered repurposing the pipeline system in past years, but the costs associated with the maintenance were viewed as unfeasible.

"[The] expense costs are significantly higher on the ammonia system than really any other pipe we've got, and a lot of that forward forecasting," Mears said. "Our historical costs have been high, but our future costs are expected to be even higher than that."

The company's ammonia pipeline services various distribution terminals situated throughout the Southern Plains and western Corn Belt, and is serviced by production facilities in Texas and Oklahoma.