Magellan Midstream Partners LP (NYSE: MMP) and TransCanada Corp. (NYSE: TRP, TO: TRP) entered into a joint development agreement for a pipeline connecting Magellan’s East Houston terminal to TransCanada’s Houston tank terminal, the companies said April 14.

The project is estimated to cost US$50 million.

A 9-mile, 24-inch pipeline would connect the terminals, giving TransCanada’s Keystone and Marketlink shippers access to Magellan’s Houston and Texas City crude oil distribution system, they said. Magellan will likely develop additional infrastructure at the East Houston terminal to accommodate movements from the new pipeline.

The companies would each hold 50% ownership interest.

Subject to agreements, rights-of-way, permits and regulatory approvals, the pipeline is scheduled to be operational by late 2016.

Magellan will be construction manager and the pipeline’s operator.

"Magellan is excited about the prospect of further enhancing our crude oil connectivity in the Houston market. This connection would provide our customers with additional supply options for the Houston Gulf Coast refining region, with access to crude oil from the Cushing storage hub,” said Michael Mears, Magellan's president and CEO.

"TransCanada is committed to developing energy infrastructure solutions for our customers in Canada and the U.S., and this project would allow us to directly connect to key refineries in the Houston and Texas City area," said Russ Girling, TransCanada's president and CEO. "This is another great example of a project that would help to bolster North American energy security and independence."

Magellan Midstream Partners LP is based in Tulsa, Okla.

TransCanada Corp. is based in Calgary, Alberta.