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NEW YORK, July 28 (Reuters) - Magellan Midstream Partners LP on Thursday reported declining volumes in the last quarter on the Longhorn and Bridgetex pipelines that carry crude from the Permian Basin to Houston as shippers likely moved barrels to the international market, while refined product volumes rose on pandemic demand recovery.
Shippers on the long-haul crude oil lines took volumes elsewhere, likely to be exported from Corpus Christi, Texas, - the top port for oil exports https://www.reuters.com/business/energy/can-us-port-infrastructure-handle-more-crude-exports-2022-07-20/#:~:text=Corpus%20Christi%20is%20the%20largest,for%20the%20Americas%20at%20Kpler - and to the broader international market, executives said on an investor call, as Europe's demand for barrels increased following Russia's invasion of Ukraine.
The port of Corpus Christi is the largest U.S. crude export port.
"That's an example of potential decisions that our shippers could be making," said Magellan Chief Executive Aaron Milford, adding that he expected the moves to be temporary. "We don't expect that to continue forever, but there are moments where they may be making those decisions for sure."
Shippers that did not fulfill their commitments would still have pay what are known as deficiency payments, which are penalties for not shipping oil, Milford said.
Volumes on the 450-mile (724-km) Magellan's wholly-owned Longhorn crude oil pipeline from West Texas to Houston averaged about 200,000 barrels per day in the three months ended June 30 compared with 260,000 bpd in the same period last year.
The Bridgetex crude pipeline from the Permian to Magellan's East Houston terminal, which is a joint venture, dropped to 215,000 bpd from nearly 315,000 bpd in the year ago period.
The Tulsa, Oklahoma-based company said in December https://www.reuters.com/markets/deals/magellan-exploring-options-its-permian-longhorn-crude-pipe-2021-12-08 that it expected relatively flat volumes for a few years on the Longhorn and the Bridgetex crude pipelines.
On the Saddlehorn pipeline in Colorado, another joint venture, volumes were about flat, while levels on the company's south Texas systems increased.
Meanwhile, volumes on the largest common carrier refined products pipeline system in the United States increased 3% partly due to pandemic demand recovery, Magellan said.
Revenue from oil storage decline as a steeply backwardated market made holding barrels less attractive and following contract expirations, while operating expenses increased $28 million.
Magellan is a significant owner of tanks at the Cushing, Oklahoma, storage hub, where levels have held closely above the operational lows of 20 million barrels in recent weeks.
(Reporting by Laila Kearney in New York Editing by Marguerita Choy)