Magellan estimates it will cost about $245 million to reverse the pipeline, a $30 million reduction from earlier estimates for the pipeline to carry 135,000 barrels per day of crude to Houston.

Magellan said it does not have commitments for the full 135,000 bpd of capacity.

“We have sufficient level to make the project accretive,” the company said.

Magellan is in a race with other pipeline companies to provide pipeline access to siphon landlocked crude oil out of the oil hub of Cushing, Oklahoma to refineries along the U.S. Gulf Coast.

The large inventory of crude from the U.S. and Canada in Cushing have created a discount of more than $25 between U.S. crude oil benchmark West Texas Intermediate and other crudes including North Sea Brent and Light Louisiana Sweet .

Magellan said it has not received any further commitments from shippers since September but is in negotiations with a number of parties for substantial incremental commitments.

If it gets more commitments, it might have to boost the capacity of the 135,000 bpd line for incremental costs.

The company told analysts on a third-quarter conference call it found savings by using an existing pipeline between Odessa and Crane, Texas for transporting refined products instead of building a new one.

Demand for refined products was down 3 percent from the previous quarter, with gasoline demand 8 percent weaker, the company said.

“While this reduces our capacity in El Paso to 58,000 barrels a day from 65,000 barrels a day previously, we believe this new El Paso capacity is more than sufficient to handle projected volume to that market and well worth the $30 million project savings,” a company spokesman said on Thursday.

Late Tuesday, Magellan said it would expand its capacity to link Eagle Ford shale oil to Houston refineries via third party pipelines.

The six-mile pipeline will connect with the Genoa and Speed Junction interchanges, which will then link with another crude pipeline along the Houston Ship Channel.

“While the scope of this project may seem fairly small, it has immense strategic values that will allow us to deliver crude oil directly to the Houston area refiners from third party pipelines that are transplanting crude oil into the Eagleford shale to the Houston area,” the company said.

City Council passed Mayor Annise Parker’s Hire Houston First initiative by a 13-1 vote on Wednesday, allowing and sometimes requiring city departments to choose the second-lowest bid for purchases and contracts if the runner-up company is from the eight-county greater-Houston area and it’s a close call.

The 5 percent edge to local businesses applies to city purchases under $100,000. For spending greater than $100,000, the local company has to be within 3 percent of the low bid.

“It makes sense to me, and obviously to City Council, that with that $4 billion … we put as much of those dollars here in the local economy as possible,” Parker said. “When we purchase from some place on the other side of the United States or outside of the United States, those dollars go out of our local economy.

“It’s a net loss to us, and we’re going to do what we can to keep those dollars here.”

Free market devotees were skeptical that the program is a net win for Houston.

Mike Sullivan, the council’s most conservative member and the only dissenting vote, said he supports the previous straight-up competition and choosing the cheapest price. He said after the meeting that an unintended consequence of the new ordinance could be a greater cost to taxpayers to cover the hometown premium.

Former county tax assessor-collector Paul Bettencourt called the measure “protectionism.”

“Trying to hold jobs by putting up a barrier to competition just means the taxpayer pays more in the end,” he said.

University of Houston economics professor Steven Craig, who has studied purchasing preferences at the state level, said they are by definition net losers. While 100 percent of the costs of a preference are born by local taxpayers to cover the increased cost when the lowest bid is not chosen, the benefits do not necessarily stay local.

Local firms that win contracts only because of the preference may not spend the profits locally. The boss may use his windfall to vacation in Europe instead of Texas. The company may buy its supplies in China while the losing low bidder buys locally.

The Greater Houston Partnership supports Hire Houston First as a measure it believes will create and retain high-paying jobs. The working-class advocacy group Good Jobs Great Houston also offered its conditional support when the mayor unveiled the initiative last month.

In passing Hire Houston First, council appeared to embrace the mayor’s contention in the ordinance that spending locally will boost employment, raise sales tax revenue and increase property values.

As her re-election bid nears, the mayor can point not only to overwhelming council support for the initiative but state backing in helping her fulfill a campaign promise she made in 2009 (and which her campaign broadcast to supporters in a Dear Friend letter Wednesday).

“The state Legislature this last session recognized the importance of keeping local dollars circulating in a local economy is so great that they actually changed state law to allow us to go to the second low bidder if it is within striking distance of the low bid,” Parker explained.