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Antitrust lawsuit – Fairway Energy vs Magellan Midstream

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World Pipelines,

In an antitrust lawsuit filed on 22 February in Harris County District Court, Fairway Energy Partners, LLC, alleges that Magellan Midstream Partners and its subsidiary, Magellan Crude Oil Pipeline Company, L.P. are stifling competition by demanding exorbitant fees to enrich itself at the expense of new entrants to the market and ultimately at the expense of the public.

"Fairway Energy is an independent Houston-based oil storage company. Fairway Energy seeks fair and open competition, and it filed this lawsuit to stop Magellan's predatory practices," said Dana Grams, Fairway Energy's Chief Commercial Officer.

Magellan is one of the largest petroleum pipeline system operators in the US.

In the lawsuit, Fairway Energy alleges that during the past decade, Magellan has used its vast resources to amalgamate more than 100 miles of pipelines and several terminals and storage facilities within the critical Houston area in an attempt to monopolise the distribution of crude oil within this market. Magellan touts its aptly-named ‘Houston-area Crude Oil Distribution System’ as "the most comprehensive system" with access to all crude oil entering the Houston market and all refineries and other delivery points within that market. Fairway Energy alleges in its lawsuit that Magellan has abused its market dominance to restrain trade, to block competition from Fairway Energy, and to make extraordinary demands in exchange for access to what is supposed to be a common carrier system. Fairway Energy alleges that Magellan's anticompetitive conduct violates Texas antitrust law.

Fairway Energy's crude oil storage facility and pipeline system offers an initial capacity to store up to 7.5 million bbls of crude oil, and it is expected to begin operations in April 2017. Fairway Energy's facility uses safe, existing underground salt dome caverns similar to those used for the US Strategic Petroleum Reserve.

"Magellan's conduct harms shippers and refiners in the Houston market and, ultimately, it harms all consumers through inefficiencies and higher prices," Grams said.

Fairway Energy's petition asserts that Magellan is liable for all damages caused by its attempted monopolisation and restraints of trade under the Texas Free Enterprise and Antitrust Act.

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US pipeline news Crude oil pipeline news