Following strong interest from fuel suppliers and customers, Phillips 66 PSX and Kinder Morgan KMI plan to establish the Western Gateway Pipeline, a system that will transport refined fuel to western markets by upgrading and redirecting existing pipelines. The Western Gateway Pipeline combines both new and existing infrastructure to optimize delivery.
Although PSX and KMI recently closed the open season after receiving strong interest from fuel suppliers and customers, they plan to hold another round of sign-ups in January 2026 to allocate the remaining pipeline capacity due to continued high demand.
During the initial open season, several companies committed to shipping fuel through the upcoming Western Gateway Pipeline. In the next round, the pipeline will be extended farther west to deliver refined products to the Los Angeles market. The new pipeline will transport fuel from Borger, Texas, to Phoenix, Arizona, where it will connect to the existing SFPP pipeline. By reversing the flow of a portion of the SFPP pipeline between Watson, AZ, and Colton, CA, fuel can then be transported westward toward California.
PSX also plans to reverse the flow of its existing Gold Pipeline, which currently supplies fuel from Borger, TX, to the Midwest, allowing fuel to be transported from the Midwest to Borger, TX, and then onward to California via the Western Gateway Pipeline.
KMI also has an existing pipeline that transport fuels from El Paso, TX.
Refined products can be transported to California not only from refineries near Borger, TX, and El Paso, TX, but also from refineries near the Midwest.
KMI and PSX are midstream players generating stable fee-based revenues and are less vulnerable to volatility in oil and gas prices. Robust demand for Western Gateway Pipeline will not only bring stability to their business models but also generate additional cash flow with increased investor appeal in the coming days. KMI currently carries a Zacks Rank #3 (Hold) while PSX sports a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other midstream players in this space are The Williams Companies, Inc. WMB, and Enterprise Products Partners L.P. EPD, each carrying a Zacks Rank #3 at present. Like PSX and KMI, both energy infrastructure providers, WMB and EPD also generate stable fee-based revenues and are less exposed to oil and gas price volatility.
WMB, headquartered in Tulsa, OK, boasts a strong portfolio in the deepwater Gulf, the Rockies, the Pacific Northwest, and the Eastern Seaboard. WMB is preparing to meet rising energy needs and plans to invest $3.95 billion to $4.25 billion in capital expenditure by 2025 (for growth project) much higher than $1.5 billion spent in 2024.
Operating in many regions with diversified products, Enterprise Products Partners has a strong focus on returning capital to its unitholders through distribution and unit repurchases. With over 50,000 miles of pipeline, more than 300 million barrels of liquids storage and other infrastructure, it can serve products and services to multiple markets.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWilliams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
Phillips 66 (PSX) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
