Magellan to close sections of NH3 pipeline for tests

Tulsa, Okla.-Magellan Midstream Partners L.P. confirmed last week that certain segments of its anhydrous ammonia pipeline will be out of service this year while the company conducts hydrotests, beginning this spring and concluding next fall. Magellan said it has been in contact with ammonia shippers to determine the schedule for the tests, which the company said “complement federal regulatory requirements.” Magellan’s 1,100-mile ammonia pipeline system delivers ammonia from production facilities in Texas and Oklahoma to terminals in the Midwest. Hydrotesting involves emptying the pipeline in sections and filling those segments with pressurized water to locate leaks or defects. One industry source told Green Markets that the announcement left ammonia producers scrambling to lease railcars so they can move product and keep plants running when the pipeline is down. While rumors circulated that the testing procedures will affect some 500 miles of the pipeline and could take five to six months to complete, Magellan offered no specifics, saying only that all segments of the pipeline system are currently operational and that it is “working with our shippers to establish the testing schedule.” The company recently reported (GM Feb. 8, p. 13) that its ammonia pipeline had record operating margins of $4.9 million for the fourth quarter ending Dec. 31, 2009, while operating margins for the full year were $3.7 million on sales of $19.9 million. Ammonia pipeline shipments totaled 223,000 st in the fourth quarter and 643,000 st for the full year. Last August, Magellan Ammonia Pipeline Co. and two of its former operating firms agreed to pay a civil penalty of $3.65 million to resolve violations of the Clean Water Act resulting from two ammonia spills that occurred in 2004 in Nebraska and Kansas (GM Aug. 29, 2009). Magellan also recently met with residents of Kronenwetter, Wisc., on Feb. 17 to discuss efforts to clean up a 35,000-gallon gasoline spill that was discovered in December at the company’s petroleum pipeline terminal in that city.