In addition, the partnership will acquire certain crude oil tank working inventory at fair market value, which is currently estimated to be approximately $50 million.

“Completion of this acquisition substantially increases our presence in the crude oil storage and distribution business,” said Don Wellendorf, chief executive officer. “Initial industry feedback has been extremely positive, and we look forward to pursuing opportunities to enhance the utilization of these assets.”

Expansion capital spending

Further, the partnership announced that it plans to construct an incremental 2.25 million barrels of crude oil storage in the crude oil hub of Cushing, Oklahoma in conjunction with a private investor group. Combined with the initial 2 million barrels announced in May 2010, this crude oil construction project now totals 4.25 million barrels of storage, all supported by long-term customer contracts. Magellan will be the majority owner and operator of the storage, which is expected to be operational in phases beginning mid-2011, with the final tanks operational by the end of 2011.

As a result of this increased project scope, the partnership is increasing its 2011 expansion spending estimates by $25 million. Including acquisitions to date, current expansion spending estimates are $565 million during 2010 with an additional $125 million, primarily in 2011, necessary to complete these projects.