Crude Summit: Cushing crude will not go into MEH price

Magellan Midstream Partners said that crude from its proposed Voyager pipeline from Cushing, Oklahoma, to the US Gulf coast will not be part of determining the Magellan East Houston price assessment.

Magellan's east Houston terminal is the pricing hub for the Argus WTI Houston assessment which includes crude delivered from west Texas on the 440,000 b/d BridgeTex and 275,000 b/d Longhorn pipelines.

Cushing crude is generally blended and Magellan "has no intention of allowing it into" the assessment for WTI delivered to Houston, senior vice president of commercial Robb Barnes said at the Argus Americas Crude Summit in Houston, Texas.

Argus in February 2015 launched the assessment for WTI delivered to Houston, set by a volume-weighted average of all Permian-quality WTI trades done during the day at Magellan East Houston.

Magellan said last month it is seeing "significant interest" in the Voyager pipeline.

The company is talking to potential shippers but has not made a decision on whether to move forward with the project, Magellan said while reporting fourth quarter earnings.

Magellan and Navigator Energy originally proposed the plan as a new 500-mile (805km) line which would move various grades of light crude and condensate from the Cushing hub to Magellan's terminal in east Houston. The companies later added a Midland origin point to the project.

But the companies have been reworking the plan, including using a substantial amount of pipe that is already in the ground to save costs.

By Eunice Bridges