Magellan Midstream Partners, L.P. (MMP) Close to Completing Gulf Coast Pipeline System

Two companies to consider
But because not every refiner in the region is equally capable of processing the light, sweet crude oil that is being pumped out from U.S. shale plays, some companies stand to benefit more than others.

Valero is a clear standout, in my opinion. It boasts seven Gulf Coast refineries, of which three are capable of processing light oil. Phillips 66, whose 247,000 bpd Sweeny Refinery in Old Ocean, Texas, which is capable of processing light, low-sulfur crude oil, also stands to benefit.

As a result of improved access to domestic crudes, these companies’ profit margins are expected to grow meaningfully over the next few years. According to estimates by Morningstar, Valero’s profit margins should average $12.80 a barrel from 2013 to 2017, up from $10.50 in 2011 and 2012, while Phillips 66’s margins are expected to increase to $13.50 per barrel, up from $11.40.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Magellan Midstream Partners, L.P.

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