New Crude Pipeline from Plains All - Analyst Blog

Plains All American Pipeline L.P. ( PAA ) announced that it will build a crude oil pipeline, stretching from McCamey to Gardendale, Texas. The new 20-inch pipeline will be known as the Cactus Pipeline and will span 310 miles (498.9 kilometers). The partnership intends to spend $350 million to $375 million for this project.

Cactus Pipeline will able to carry roughly 200,000 barrels per day of crude oil initially and subsequently scale up the capacity when demand increases. This pipeline is expected to be online in the first quarter of 2015.

Cactus Pipeline is anticipated to carry sweet and sour crude oil from the Permian Basin to another crude oil pipeline in South Texas, known as the Eagle Ford Joint Venture (Eagle Ford JV) Pipeline jointly established by Plains All American Pipeline and Enterprise Products Partners L.P. ( EPD ). The pipeline will also have connections with the rail loading capacity at the partnership's Gardendale station and the Eagle Ford JV barge dock capacity in the Corpus Christi area.

Pipeline operators normally invest substantial amounts to set up new pipelines after getting long-term service assurance from petroleum companies. Plains All American Pipeline has already inked a long-term agreement with an organization for utilizing the majority of the pipeline's capability and is in the middle of dialogues with several shippers for the rest of the capacity.

It is evident from Plains All American Pipeline's recent strategies that the partnership continues to strengthen its footprint in Texas, particularly in the Eagle Ford area. In 2011, the partnership acquired the Gardendale Gathering System from Velocity with a transaction value of $349 million and formed Eagle Ford Pipeline LLC with Enterprise Products Partners in 2012. We believe that the installation of this new pipeline will enable the partnership to strengthen its presence in the Eagle Ford region and serve customers in a better way.

Houston, Texas-based Plains All American Pipeline, L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products.

Plains All American Pipeline currently has a Zacks Rank #3 (Hold). Other stocks from the industry that are presently performing better are Zacks Ranked #2 (Buy) Atlas Pipeline Partners L.P. ( APL ) and Delek Logistics Partners LP ( DKL ).

ATLAS PIPLN PTR (APL): Free Stock Analysis Report

DELEK LOGISTICS (DKL): Free Stock Analysis Report

ENTERPRISE PROD (EPD): Free Stock Analysis Report

PLAINS ALL AMER (PAA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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