Kinder Morgan Energy Partners LP
) rose 2.9% to close at $82.43 on Oct 18, 2013, as investors
cheered the partnership's proposal to build nine new tanks with a
capacity of 2.25 million barrels.
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The new tanks to be build at the Deeprock oil storage facility at
Cushing, Oklahoma, are expected to accommodate oil from a
Due to rapid expansion in the past three years, the oil hub has a
current storage capacity of 1.75 million barrels and total
capacity of just less than 80 million barrels.
The storage will obtain shale oil from North Dakota's Bakken
formation and carry it along the 430-mile Pony Express pipeline.
Tallgrass Energy Partners LP
), the operator, will be responsible for reversing and converting
the pipeline to carry oil.
The project also involves two pipelines that will link to five
Cushing destinations and will have a capability to manage 350,000
barrels of oil per day upon completion. Kinder Morgan Energy
Partners has a stake of 51% in the Deeprock facility. The
partnership will commit $26 million of the total $52 million
Kinder Morgan is one of the largest publicly traded master
limited partnerships (MLPs) and generally serves as a benchmark
for the pipeline MLP group. A focus on fee-based and diversified
businesses has enabled the partnership to spread its business
risks. In addition, the CO2 business is a major growth avenue for
the partnership with the commodity price risk being offset by a
long-term hedging strategy.
Kinder Morgan Energy Partners carries a Zacks Rank #3 (Hold).
However, Zacks Ranked #1 (Strong Buy) stocks -
Stone Energy Corp.
Linn Energy LLC
) - are good buying options for the short term.