A leading master limited partnership (MLP),
Enterprise Products Partners, L.P.
) has entered into a 50/50 joint venture (JV) with
Plains All American Pipeline, L.P
) for a crude oil pipeline in South Texas.
ENTERPRISE PROD (EPD): Free Stock Analysis
PLAINS ALL AMER (PAA): Free Stock Analysis
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Per the agreement, certain portions of the previously declared
pipeline projects servicing the Eagle Ford shale play between the
JV parties will be consolidated in South Texas. The joint venture
is expected to optimize the companies' capital investments and is
supported by a commitment of 210,000 barrels per day (BPD) from
A 140-mile crude oil and condensate line − with a capacity of
350,000 BPD − from Gardendale in LaSalle County to Three Rivers in
Live Oak County will form part of the JV. This will continue up to
Corpus Christi, and join a new 35-mile pipeline segment from Three
Rivers to Enterprise Products' Lyssy station in Wilson County.
Enterprise Products' South Texas Crude Oil Pipeline will
interconnect the JV pipeline at Lyssy. Parts of the system is
expected to be operative by the fourth quarter of 2012 and the
balance will come online in first half of 2013. The initial base
tariff rate will be $1.25 per barrel from Gardendale to all
Both the parties are of the view that this venture will reduce
their capital costs associated with higher returns. It will also
enhance the market accessibility to shippers.
Plains All American Pipeline, L.P., headquartered in Houston, Texas
is an MLP engaged in the transportation, storage, and marketing of
crude oil and refined products.
Enterprise Products is engaged in providing a wide range of
midstream energy services to the producers and consumers of natural
gas, natural gas liquids, and crude oil.
We continue to view Enterprise Products as a core holding in an MLP
portfolio, given its string of organic growth projects, potential
acquisitions, strong balance sheet and solid liquidity position.
Currently, Enterprise Products holds Zacks Rank of #3, which
implies a short-term 'Hold' rating. We are also maintaining our
long-term Neutral recommendation on Enterprise