Kinder Morgan Energy Partners, L.P.
) announced that its subsidiary, Kinder Morgan Cochin LLC has
signed a letter of intent with NOVA Chemicals Corporation to
develop a new products pipeline from the Utica Shale. The
proposed $300 million pipeline christened Kinder Morgan Utica To
Ontario Pipeline Access (UTOPIA) would transport refined or
fractionated natural gas liquids (NGLs), including ethane and
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Per the agreement, Kinder Morgan Cochin will develop, construct,
own and operate the 210-mile, 10-inch diameter pipeline from
multiple fractionation facilities in Harrison County, Ohio, to
Kinder Morgan's Cochin Pipeline near Riga, Michigan. The pipeline
would enable the company to move product via Cochin east to
Windsor, Ontario, Canada.
The pipeline is expected to have an initial capacity of 50,000
barrels per day (bpd), which is expandable to more than 75,000
bpd. The company expects the pipeline to be operational by mid
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 dilute its business
Kinder Morgan Inc.
), one of the largest mid-stream energy companies in the U.S.,
owns the partnership's general partner interest.
However, Kinder Morgan remains vulnerable to volatile crude
oil and natural gas prices, imbalance between supply and demand
for its products, and rising interest rates. As such, we expect
the partnership to perform in line with the broader industry and
rate it Neutral on a long-term basis. Kinder Morgan currently
holds a Zacks #3 Rank (short-term Hold rating).
Meanwhile, there are certain other better-ranked energy pipeline
Enbridge Energy Management LLC
Magellan Midstream Partners LP
) that offer value and are worth buying now. Both partnerships
sport a Zacks Rank #2 (Buy).