The company has begun construction on a $2 million sequential blending system at its west Tulsa fuel terminal, and it plans to build similar systems in Oklahoma City, two in Georgia and one in Delaware.

"By adding this infrastructure, we're giving our customers the ability to blend year round, if they choose to," said Bruce Heine, a spokesman for Tulsa-based Magellan Midstream.

The system will allow Magellan customers to load trucks with a blend of ethanol and gasoline and take the fuel to gasoline outlets within a 75-mile radius, Heine said.

The new blending system in Tulsa is scheduled to begin operation April 1. It will be able to produce exact blends of 10 percent ethanol and 90 percent gasoline, known as E10, and also blends such as E85, a mixture of 85 percent ethanol and 15 percent gasoline.

The company currently offers blending at 36 other terminals across the Midwest, as far north as North Dakota and as far south as Houston. Magellan operates 81 terminals nationwide.

"This is our first investment for renewable fuels distribution infrastructure at one of our terminals in our home state," Magellan CEO Don Wellendorf said in a prepared statement.

Magellan's decision to add ethanol facilities were

"We've made investments over the last 28 years that were driven by our customers," Heine said.

Magellan began blending in 1980 after a federal excise tax made ethanol, which is derived from corn or other starch-based crops, competitive with gasoline. Ethanol, when combined with gasoline, reduces vehicle emissions.

Heine declined to comment on which of the company's customers would benefit from the facility.

But the city's largest gasoline retailer, Tulsa-based QuikTrip Corp., began offering an E10 blend in September. Also, Murphy USA announced in October that it was using a blended fuel at its 15 area stations.

Mike Thornbrugh, a spokesman for QuikTrip, said the abundance of ethanol has helped the convenience store chain hold down fuel prices as gasoline prices have escalated.

QuikTrip earlier offered the E10 blend in other markets. However, it did not offer the fuel at its 55 Tulsa area stores until September because of a voluntary agreement that re quires the retailer to use a special summer blend.

Summer blends are designed to burn cleaner in the warm months, reducing pollution. They are part of the reason gasoline prices begin to rise in the spring. As refineries switch to summer blends, their production is often hampered.

Tulsa, unlike other cities, has used a summer blend that does not contain ethanol, Thornbrugh said. Tulsa's summer blend translates into a price difference between Tulsa and Oklahoma City.

"Last summer, we were seeing a 10-to-15-cent . . . price disadvantage to the Tulsa consumer," he said.

Tulsa often is one of the least expensive places to buy fuel in the country. But last summer, fuel prices here were sometimes above the national average.

Last week, the average price for a gallon of regular-grade gasoline in Tulsa was 20 cents lower than the national average of $3.07, according to AAA and the Oil Price Information Service.

Jason Womack 581-8380
jason.womack@tulsaworld.com