The Corona virus pandemic has significantly reduced demand for refined petroleum products around the globe, causing in turn the closure of some U.S. oil refineries. Paradoxically, this will have a net benefit to Magellan Midstream Partners LP's refined products pipeline systems, the company's chief executive officer, Mike Mears, said last week at the Barclay's CEO Energy-Power conference.
"It creates the opportunity for more volume movement to replace what the refinery was putting into the market directly and it will create a longer-haul movement for existing volumes because they need to be transported from farther away."
HollyFrontier's Cheyenne, Wyoming refinery, which is being converted into a renewable diesel plant, and Marathon Petroleum's shuttering Gallup, New Mexico, refinery are among the recently announced closures that would benefit Magellan's system, Mears said.
He said expects the trend to continue as the country moves away from traditional fuel sources in the coming decades.
"It's very hard to predict when and who, but it will happen over the course of time," Mears said.
The Tulsa, Oklahoma-based midstream company, which also transports crude oil, said it has seen demand for gasoline linger at lower levels than predicted. Metropolitan areas have lagged behind rural communities, where fuel demand has come close to fully recovering, Mears said.