While sections of Magellan Midstream Partners LP’s anhydrous ammonia pipeline will go down this summer for hydrotesting (GM May 24, p. 1), no such interruptions are expected on the other anhydrous ammonia pipeline, the one owned by NuStar Energy LP, San Antonio.
NuStar told Green Markets last week that its U.S. Department of Transportation-required baseline smart pigging (in-line inspection, or ILI) of its system occurred in 2008. “We have no issues that have surfaced from those smart pig runs or from pipe failures that would require us at this time to do hydrotesting on any portion of our mainline,” said a company spokesman. “We did have to hydrotest some lateral pipelines because they were not piggable, but that has all been completed.”
NuStar’s line is a part of its NuStar Pipeline Operating Partnership (NuPOP). The 2,000 mile pipeline originates in the Louisiana Delta, where it has access to three marine terminals and three anhydrous ammonia plants on the Mississippi River. It runs north through Louisiana and Arkansas into Missouri. At Hermann, Mo., one branch splits and goes east into Illinois and Indiana, while the other branch continues north into Iowa and then turns west into Nebraska. It is connected to multiple third-party-owned terminals, which include industrial facility delivery locations. It transported 1.2 million st of ammonia in 2009, down from 2008’s 1.5 million st.
The company said ammonia throughput was up during first quarter 2010 due to improved weather conditions. Revenues were up $1.3 million over the prior year quarter.
Magellan has also seen increased volumes in the first quarter (GM May 10, p. 9), and says the current hydrotesting will allow it to see better results going forward.
“The demand for this service is extremely strong,” Magellan Chief Operating Officer Michael Mears said May 13 at an investor conference. “This pipeline transportation of fertilizer into these markets is significantly more cost competitive than the other alternatives for the ammonia producers, which would be rail and truck or in some cases barge.
“We’ve had a number of unique pipeline integrity issues that we’re resolving this year that have somewhat hampered the profitability of this system,” Mears added. “But our expectations are, as we get through this year and we get that work done, that the profitability of this will ramp up substantially over the next few years.” He said that is driven by contracts from pre-existing customers and their continued interest in the system. “We’re primarily a fee-based system, 85 percent of our operating margin in 2009 was from fee-based activities.”
Magellan’s 2009 ammonia volumes were off 22 percent, to 643,000 st from 2008’s 822,000 st (GM Feb. 8, 2010).