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<SEC-DOCUMENT>0001193125-08-205364.txt : 20090319
<SEC-HEADER>0001193125-08-205364.hdr.sgml : 20090319
<ACCEPTANCE-DATETIME>20081002171746
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-08-205364
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20081002

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MAGELLAN MIDSTREAM PARTNERS LP
		CENTRAL INDEX KEY:			0001126975
		STANDARD INDUSTRIAL CLASSIFICATION:	PIPE LINES (NO NATURAL GAS) [4610]
		IRS NUMBER:				731599053
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		ONE WILLIAMS CENTER, MD 28-1
		CITY:			TULSA
		STATE:			OK
		ZIP:			74172
		BUSINESS PHONE:		918 574 7000

	MAIL ADDRESS:	
		STREET 1:		ONE WILLIAMS CENTER, MD 28-1
		CITY:			TULSA
		STATE:			OK
		ZIP:			74172

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	WILLIAMS ENERGY PARTNERS L P
		DATE OF NAME CHANGE:	20001024
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML><HEAD>
<TITLE>Correspondence</TITLE>
</HEAD>
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<IMG SRC="g70450magellan.jpg" ALT="LOGO"> </P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">October&nbsp;2, 2008 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Brad
Skinner </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Senior Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and
Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Division of Corporate Finance </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mail Stop
7010 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Washington, D.C. 20549-7010 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Gentlemen: </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">We have received your letter of September&nbsp;19, 2008 wherein you have provided to us your comments and questions related to: </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Magellan Midstream Partners, L.P. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Form 10-K for the Fiscal Year Ended
December&nbsp;31, 2007 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Filed February&nbsp;28, 2008; and </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Form 10-Q for the Quarterly Period Ended June&nbsp;30, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Filed August&nbsp;5, 2008 </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">File No.&nbsp;1-16335 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The purpose of this correspondence is to provide our
responses to the comments and questions related to the above-noted filings. Before we get into our detailed response we make the following acknowledgments: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="1%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">We recognize that Magellan Midstream Partners, L.P. (the &#147;Partnership&#148;) is responsible for the adequacy and accuracy of the disclosures in our filings;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">We recognize that staff comments or changes to disclosures in response to staff comments do not foreclose the U.S. Securities and Exchange Commission from taking
any action with respect to our filings; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">We recognize that the Partnership may not assert staff comments as a defense in any proceedings initiated by the U.S. Securities and Exchange Commission or any
person under the federal securities laws of the United States. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">For ease of reference, we have repeated your questions / comments in our
response. </FONT></P>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Brad Skinner </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Senior
Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">October 2, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Form 10-K for the Fiscal Year Ended
December&nbsp;31, 2007 </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Introduction, page 34 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">1.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>Tell us and disclose what factors influenced the decision to transfer the two inland terminals in the Dallas, Texas area from petroleum products terminals to the petroleum
products pipeline system</I>. </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Response: </B>The decision to transfer two inland terminals in the Dallas area from our petroleum products
terminals to the petroleum products pipeline system was made in order to optimize and make more seamless our service offering to our customers with the end goal of increasing revenues through both the petroleum products pipeline system and the
petroleum products terminals. Prior to the transfer, in order for customers to do business at our Dallas facilities, our customers had to work with two Magellan entities. Additionally, we had two distinct marketing efforts, one for the pipeline
transportation to Dallas, Texas and the other for terminalling services (which may or may not have included using our petroleum pipeline system). Management believed that combining the assets under one commercial group would optimize our marketing
efforts and increase throughput for both our pipeline to Dallas and Dallas terminal facilities. We will disclose this additional information in our Annual Report on Form10-K for the year ending December&nbsp;31, 2008. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Unrecognized Product Gains, page 48 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><I></I>2.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>We note your petroleum products terminal operations generate product overages and shortages. (a)&nbsp;Tell us and disclose in more detail how these product overages and shortages
are generated. (b)&nbsp;We also note your net overages are recognized in your financial statements when the barrels are either sold or used to offset product losses. Tell us and disclose your contractual and accounting basis for recognizing this
excess product as a sale or as an offset against product losses. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Response to Part (a) - Tell us and disclose in more detail how these
product overages and shortages are generated.</B> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Overages and shortages at our petroleum products terminals result from (i)&nbsp;metering inaccuracies,
(ii)&nbsp;product evaporation or expansion and (iii)&nbsp;product spills and product contamination. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">To illustrate how overages and shortages result from
metering inaccuracies, consider the following: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">Most of our customers receive product into our terminalling facilities via third-party pipelines. Our contracts with customers state that the product custody
transfer measurement is based on the third-party pipeline company&#146;s meter regardless of the </FONT>
</P></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">2 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Brad Skinner </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Senior
Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">October 2, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:0%">
<FONT FACE="Times New Roman" SIZE="2">actual amount received which may be higher or lower than the metered amounts. For example, if a third-party pipeline meters a delivery of 5,000 barrels of
product to our facility on behalf of Customer A and if the actual amount of the delivery is only 4,995 barrels of product, we would experience a loss of 5 barrels since we would credit Customer A&#146;s inventory balance with the full 5,000 barrels.
Conversely, if the actual delivery was 5,005 barrels, we would experience a gain of 5 barrels of product. </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">Most of our customers take product from our terminalling facilities via tanker trucks. Our contracts with these customers state that the custody transfer
measurement is the meter at our truck rack. If our custody transfer meter is not completely accurate, we experience product gains and losses when we meter product into our customers&#146; tanker trucks. </FONT></P></TD></TR></TABLE> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Product losses also occur as a result of the evaporation of product from our tanks and if product is mishandled and spilled. Product contamination occurs when different
grades or different types of petroleum products are inadvertently commingled. Certain weather conditions and other anomalies can result in product expansion, which create product gains. We bear the risk of loss (or gains) from all of the above-noted
conditions. We will include additional disclosure to clarify how product shortages and overages occur in our Annual Report on Form 10-K for the year ending December&nbsp;31, 2008. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Response to Part (b) - We also note your net overages are recognized in your financial statements when the barrels are either sold or used to offset product losses. Tell us and disclose your contractual and
accounting basis for recognizing this excess product as a sale or as an offset against product losses. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The contracts that we have with our customers
include provisions which clearly specify that we bear the risk of loss or benefit from any gain resulting from product measurement inaccuracies into and out of our terminalling facilities. This is our basis for recognizing the product gains as sales
or as offsets against product losses. We will include additional disclosure to clarify this point in our Annual Report on Form 10-K for the year ending December&nbsp;31, 2008. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">3 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Brad Skinner </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Senior
Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">October 2, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Critical Accounting Estimates, page 48
</U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><I></I>3.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>We note the critical assumptions, use of management&#146;s judgment and estimates disclosed in Note 2 of your financial statements in regard to Goodwill and Other Intangible
Assets and Impairment of Long-Lived Assets. Please consider revising your Critical Accounting Estimates in future filings to disclose the use of these estimates in your financial reporting. </I></FONT></TD></TR></TABLE> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Response: </B>In future filings we will include in our Critical Accounting Estimates the use of management estimates relative to Goodwill and Other Intangible Assets
and Impairment of Long-Lived Assets. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Consolidated Statements of Cash Flows, page 62 </U></FONT></P> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><I></I>4.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>Please describe the nature of the amounts recorded as &#147;equity method incentive compensation expense&#148; on your consolidated statements of cash flows.
</I></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Response:</B> Please refer to the first bullet in our response to Comment 8 below. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Note 2. Summary of Significant Accounting Policies </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Revenue
Recognition, page 70 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><I></I>5.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>We note you recognize petroleum pipeline and ammonia transportation revenues when shipments are complete. Tell us and disclose more specifically what event occurs to consider a
shipment complete. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Response:</B> Shipments are complete when our customers take possession of their products out of our systems
through tanker truck, rail car or third-party pipeline. We will include this clarifying language in our future filings. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Deferred Transportation
Revenues and Costs, page 70 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><I></I>6.<I></I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>(a) We note you defer certain invoiced amounts associated with in-transit products as deferred liabilities. Please tell us if these amounts are classified as &#147;other deferred
liabilities&#148; or &#147;deferred revenue&#148; on the consolidated balance sheet. (b)&nbsp;If these amounts do not constitute the entire balance recognized as other deferred liabilities, please tell us the nature of the remaining amounts recorded
as other deferred liabilities as of December&nbsp;31, 2007 and 2006. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Response to Part (a) - We note you defer certain invoiced
amounts associated with in-transit products as deferred liabilities. Please tell us if these amounts are classified as &#147;other deferred liabilities&#148; or &#147;deferred revenue&#148; on the consolidated balance sheet. </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">4 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Brad Skinner </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Senior
Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">October 2, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The amounts we have invoiced our customers for
transportation services that have not yet been delivered (in-transit products) are classified as deferred revenue on our consolidated balance sheets. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2"><B>Response to Part (b) - If these amounts do not constitute the entire balance recognized as other deferred liabilities, please tell us the nature of the remaining amounts recorded as other deferred liabilities as of December&nbsp;31, 2007
and 2006. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The makeup of other deferred liabilities as of December&nbsp;31, 2007 and 2006 was as follows: </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="84%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="5" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="1"><B>December&nbsp;31,</B></FONT></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1px solid #000000;width:79pt"><FONT FACE="Times New Roman" SIZE="1"><B>Description of Liability</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="1"><B>2007</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="1"><B>2006</B></FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Product supply liability (a)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">24,348</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">26,911</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Supply agreement deposit (b)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">18,500</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">13,500</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Deferred capacity lease revenues &#150; noncurrent portion</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,848</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,165</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Ad valorem taxes payable &#150; noncurrent portion</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,350</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,800</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Asset retirement obligations</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,305</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,215</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Obligations under consent decrees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,228</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Financial derivative obligations</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,218</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Other</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,578</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">908</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-top:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-top:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-top:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-top:1px solid #000000">&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">48,929</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">48,945</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-top:3px double #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-top:3px double #000000">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-top:3px double #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-top:3px double #000000">&nbsp;</TD></TR>
</TABLE> <P STYLE="line-height:8px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(a)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">In October 2004, in conjunction with the acquisition of certain pipeline assets, we agreed to assume from the seller a long-term third-party supply agreement. The terms of that
supply agreement were at below-market rates on average over the life of the contract and we recognized a liability for the estimated fair value of the agreement. The amounts above represent the long-term unamortized portion of this liability.
</FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(b)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The supply agreement discussed in (a)&nbsp;above required our customer to put up a deposit in the event of their non-compliance with the terms of agreement. The amount of the
deposit was periodically adjusted based on certain market factors. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">5 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Brad Skinner </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Senior
Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">October 2, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Variable-Rate Terminalling Agreements, page 70
</U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">7.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>We understand that you are a party to certain long-term agreements that provide for fees charged to customers for storage services provided on a discount basis and terminalling
activities provided on a variable rate based on a percentage of the customers&#146; net profits. Your disclosure states storage rental and throughput fees are recognized as services are provided; however, revenues from terminalling fees are not
recognized until the end of the contract term. To assist in our understanding of your accounting, please provide us with further detail as to the terms of these contracts, such as but not limited to the contracts&#146; duration and variable fee
structure. In your response, please specifically address the contract terms that do not allow you to estimate or determine revenues earned for terminalling activities until the end of the contract term. In addition, tell us how you consider
separating the storage rentals and terminalling activities as separate units of accounting and recognized over the contract term under the guidance of EITF 00-21 and SAB 104.</I> </FONT></TD></TR></TABLE> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Response:</B> To clarify &#150; our long-term agreements do not provide for a discounted storage rate fee and terminalling activities on a variable rate basis.
Rather, our variable-rate agreements provided for terminalling and storage fees at specific rates, which were deeply discounted to market rates. In addition to those discounted terminalling and storage revenues, we would receive variable storage
fees equal to half of the cumulative profits (in excess of a certain threshold) from our customer&#146;s trading activities. Based on these facts and circumstances, we do not believe the guidance under EITF 00-21 is applicable to accounting for the
variable storage fee revenues under these agreements. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">In January 2005 we entered into our first variable-rate terminalling agreement. The duration of this
agreement was January&nbsp;1, 2005 through January&nbsp;31, 2006. The terms of this agreement stated that we would provide our customer terminalling and throughput services for a specific tank at our terminalling facility at Galena Park, Texas at
specified rates, which were deeply discounted from normal market rates. These contractually-specified rates were the basis for what we recognized as storage and throughput revenues each accounting period during the duration of this contract. In
addition to the discounted terminalling and storage fees, the terms of the agreement provided that we would receive storage revenues equal to half of any cumulative profits, above a certain dollar threshold, that our customer earned through trading
petroleum products around our tank at Galena Park during the duration of the contract; however, we were under no obligation to share in any losses sustained by our customer. As a result, the cumulative amounts of trading profits or losses realized
by our customer could not be determined until the end of the contractual terms, i.e. losses sustained in the final month of the agreement could more than offset all profits earned during the first twelve months of the agreement, in which case we
would have recognized no revenues under the variable-rate component of this agreement. When this first variable-rate agreement expired in January 2006, our share of the profits from our customer&#146;s trading activities was $6.4 million, which we
recognized as storage revenues for that period. Our decision to defer recognizing these variable-rate </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">6 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Brad Skinner </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Senior
Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">October 2, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">fees until the end of the contract term was in accordance with the provisions of EITF No. D-96, <I>Accounting for Management Fees Based on a Formula.</I>
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">We have subsequently entered into several more of these types of agreements at both our Galena Park and East Houston, Texas facilities with terms
substantially similar to those described above. Two separate contracts expired on December&nbsp;31, 2006 and 2007 and we recognized revenues of $3.0 million and $2.8 million, respectively, on these agreements. Another contract expired during 2007;
however, our customer sustained trading losses during the term of that agreement and we recognized no revenues under the variable-rate portion of that agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2"><U>Note 15. Long-Term Incentive Plan, page 92 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><I></I>8.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>We note the awards granted in 2006 and 2007 (except for the unit awards granted in March 2007) are separated and accounted for as 80% of the total award classified as equity and
20% of the award classified as liabilities. It is unclear why you have allocated each unit award grant into separate classifications under SFAS No.&nbsp;123(R). For example, we note the 20% of award grants are based on personal performance, which in
itself does not prohibit classifying and accounting for such award as equity. In addition, it is unclear what provisions in SFAS No.&nbsp;123(R) allow for the separation of individual units award grants into equity and liability classification.
Please provide us with sufficient detail regarding the terms of the unit award grants made in 2006 and 2007 and the provisions of SFAS No.&nbsp;123(R) that you relied on in determining how to account for these unit awards.
</I></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Response: </B>Under our long-term incentive plan (Described in Note 15 on page 92 of our Annual Report on Form 10-K for the year
ended December&nbsp;31, 2007), certain employees have been granted long-term incentive awards. The annual grants issued by the Compensation Committee of Magellan GP, LLC, our general partner (the &#147;Compensation Committee&#148;), are, in effect,
two separate grants &#150; one being a fixed payout grant and the other a variable-payout grant. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The payout calculation for the long-term incentive awards
is a two-step process. Step one involves measuring the Partnership&#146;s performance versus pre-established financial metrics and adjusting the participant&#146;s initial grant award by 0% to 200% depending on the Partnership&#146;s financial
performance (resulting in the Adjusted Grant Award). Step two allows the Compensation Committee to increase or decrease the Adjusted Grant Award by up to 20% depending on the participant&#146;s personal performance, with the participant&#146;s
personal performance subjectively determined by the Compensation Committee. Therefore, a participant has mathematical certainty related to 80% of their initial grant award given that the Compensation Committee only has discretion to reduce the
initial grant award by a maximum of 20%. As a </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">7 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Brad Skinner </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Senior
Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">October 2, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">result, we account for 80% of the initial award as a fixed-payout grant and 20% as a variable-payout grant. </FONT></P> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">The payout calculation for 80% of the awards is based solely on the attainment of the financial metrics established by the Compensation Committee. We account for
this component of the award grants as equity under Statement of Financial Accounting Standards (SFAS) No.&nbsp;123(R), Share-Based Payment. The expense we recognize associated with this portion of the award grant is the adjustment on our cash flow
statements with the caption &#147;Equity method incentive compensation expense&#148;. </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="1%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">The payouts of the remaining 20% of the awards are based upon the individual participant&#146;s personal performance, which is subjectively determined by the
Compensation Committee. Because the Compensation Committee retains discretion in the ultimate payout for this component of the award, there is no mutual understanding of the terms of the award; therefore, the measurement date for the award is not
determined until the end of the vesting period. As such, these awards were accounted for as liabilities. As provided for under paragraph A83 of SFAS No.&nbsp;123(R), the associated expense was recorded over the vesting period of the awards, since
there was no substantive service requirement between the end of the vesting period and the date the final payout of the awards were determined by the Compensation Committee. Historically, payouts under the discretionary element of the plan have
generally followed the payout calculated using the financial metrics, meaning that if the Partnership&#146;s financial results indicate a 200% payout versus the financial metric, then both the 80% awards referred to above and the 20% discretionary
awards referred to in this paragraph are paid out at 200%. However, the Compensation Committee has no obligation to make any payout relative to this 20% discretionary component of the award and they have historically made individual adjustments
based on a participant&#146;s performance, which as previously mentioned is not objectively determined. The expense we recognize associated with this portion of the award grant is included in our cash flow statements under the caption &#147;Other
current and non-current assets and liabilities&#148;. </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><I></I>9.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><I>On a similar note, you have disclosed on page 71 that certain unit award grants are subject to personal and other performance components which could increase or decrease the
number of units to be paid out by 20%. (a)&nbsp;Tell us how you have accounted for this additional provision to your incentive compensation awards. (b)&nbsp;Tell us if this 20% increase or decrease is the same 20% classified as a liability, as
discussed above. </I></FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">8 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Brad Skinner </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Senior
Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">October 2, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Response to Part (a) - Tell us how you have
accounted for this additional provision to your incentive compensation awards</B>. <B> </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">This is not an additional provision of the award. To describe
how the payout for the 20% award component of our long-term plan is determined, consider the following illustration: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">To illustrate how the payouts under
our long-term incentive plan would be determined, assume the following: (i)&nbsp;a participant is granted 1,000 units and (ii)&nbsp;at the end of the vesting period, the attainment of the Partnership&#146;s financial metric resulted in a 200%
stretch payout. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">As described on Page 71 of our 10-K, the participant would be eligible to receive 2,000 units (1,000 originally granted units x 200%
stretch payout); however, 400 (20%)&nbsp;of the units can either be added to or taken away from the participant&#146;s award payout, at the discretion of the Compensation Committee. The result is that the participant has a guaranteed award payout of
1,600 units (2,000 units &#150; 400 units) and a discretionary award payout ranging from 0 units to 800 units based on the Compensation Committee&#146;s subjective view of personal performance. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">As described in Footnote 15 of our 10-K, 80% of the awards are considered non-discretionary and subject solely to the financial metric while the remaining 20% are
subject to discretion of the Compensation Committee. Therefore, using the facts set forth above, the 80% element of the award results in 1,600 units being paid out (1,000 units x 200% x 80%). The 20% element of the awards can range from 0 units to
800 units (or 0% to 200%) depending on the Compensation Committee&#146;s view of personal performance (1,000 units x 200% x 20% x (0-200%)). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The cases
where the Compensation Committee has made adjustments to the 20% component of an individual&#146;s award grant have been rare. As a result, when developing our estimates for recognizing compensation expense, we have always assumed the payout for the
20% component of the award would follow the payout assumptions for the 80% component of the awards. In the cases where the Compensation Committee did make an adjustment to the 20% component of the award grants, we recognized additional compensation
expense for the additional awards granted for the period in which the Compensation Committee made the adjustment. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Therefore, we believe that, given the
structure of our long-term incentive plan, we have appropriately applied the provisions of SFAS No.&nbsp;123(R). </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">9 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Brad Skinner </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Senior
Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">U.S. Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">October 2, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Response to Part (b) - Tell us if this 20%
increase or decrease is the same 20% classified as a liability, as discussed above. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The 20% is not an additional provision of the Partnership&#146;s
incentive compensation award. Rather, it is another way of describing the discretionary element to the incentive compensation calculation.&nbsp;We will add language to our future filings to make this clearer. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">I trust the responses discussed above adequately address your questions and concerns. If you have follow-up questions, please feel free to call me direct at
(918)&nbsp;574-7004. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Sincerely, </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">/s/ John D. Chandler
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">John D. Chandler, </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Chief Financial Officer </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Magellan Midstream Partners, L.P. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">10 </FONT></P>

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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
