Kinder Morgan Energy Partners, L.P.
) announced the commissioning of its crude oil and condensate
pipeline to ship the increasing oil and condensate production from
the Eagle Ford, Texas region to the Houston refining hub. The
partnership successfully completed the $215 million pipeline
project on time and within budget, and expects it to be immediately
accretive to cash available to KMP unitholders.
This huge Kinder Morgan crude/condensate pipeline (KMCC) − with
a capacity of 300,000 barrels per day (BPD) − includes 65 miles of
new-build structure and 113 miles of converted natural gas
pipeline. It will distribute supplies into terminalling facilities
that feed local refineries, petrochemical plants and docks along
the Texas Gulf Coast.
Additionally, it will be further connected to a planned $200
million condensate processing facility. This unit will be
constructed near Kinder Morgan's Galena Park terminal on the
Houston Ship Channel. With an initial capacity of 50,000 BPD, the
facility is scheduled for a first quarter 2014 start-up, and has
the potential to reach 100,000 BPD.
In recent years, production from the south Texas Eagle Ford
region has reached a new high, resulting in the overall jump in
U.S. oil production. Technological development and high prices
encouraged the major energy companies to concentrate on
Kinder Morgan's planned investments for the Eagle Ford Shale
region have now reached more than $800 million, including joint
ventures and other projects. Eagle Ford production touched 520,000
BPD in April, almost double the 270,000 BPD output in June of 2011,
as per the estimates from energy consultancy firm, Bentek.
Houston-based Kinder Morgan Energy Partners L.P is the largest
independent owner and operator of petroleum product pipelines in
the U.S. With an enterprise value of more than $90 billion, the
partnership is the fourth largest energy company in North America
based on enterprise value. We expect Kinder Morgan to seize
attractive investment opportunities in the near term, in particular
the Eagle Ford and Haynesville shale plays.
We maintain our long-term Neutral recommendation for Kinder
Morgan considering the uncertain macro environment, low demand for
refined products and acquisition and execution risks. The
partnership holds a Zacks #3 Rank, which is equivalent to a Hold
rating for a period of one to three months.
Kinder Morgan faces competition from
Enbridge Energy Partners, L.P.
Products Partners, L.P.
ENBRIDGE EGY PT (EEP): Free Stock Analysis
ENTERPRISE PROD (EPD): Free Stock Analysis
KINDER MORG ENG (KMP): Free Stock Analysis
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