Environmentalists may be winning the latest battle against the Keystone pipeline, but these top midstream companies will be winning the pipeline war…
A few weeks back, I wrote about how the Keystone XL delay has become a boon for midstream companies that are partnering with railway companies to build new rail terminals.
With oil-by-rail shipments increasing by the day, this has been a logical play for investors to get in on a rapidly growing business.
But as it turns out, rail isn’t the only way to cash in on the Keystone’s never-ending delays.
In fact, while Keystone is bearing the brunt of the media and environmental criticisms, other major pipeline projects have either already been approved or are well on their way to getting built.
Last month, Williams Companies Inc. (NYSE:WMB) and Boardwalk Pipeline Partners LP (NYSE:BWP) announced that they were building the Bluegrass Pipeline from the Utica and Marcellus shales to Louisiana. The pipeline will have a 400,000 bpd take away capacity and is expected to be in operation in late 2015.
This past week, a 45-mile natural gas pipeline was proposed by Hess Corp. (NYSE:HES) that will connect Ohio’s portion of the Utica shale with the Texas Eastern and Rockies Express interstate pipelines.
Not to be outdone, TransCanada is pushing forward with another pipeline project that will carry fuel from the Alberta oilsands eastbound to New Brunswick.
Yes, even the embattled owner of the Keystone XL isn’t deterred that their flagship project is stuck in the approval stage.
But the one company that’s really been making moves of late is pipelining giant Kinder Morgan (NYSE:KMP).
At the start of the year, the company acquired Eagle Ford midstream player Copano Energy for $3.9 billion which gave Kinder 6,900 miles of additional pipelines and nine gas processing plants throughout Texas, Oklahoma and Wyoming.
In early May, Kinder Morgan submitted a pipeline expansion proposal for its Trans Mountain system in Canada that would increase the nominal capacity from 300,000 bpd to 890,000 bpd. If approved, the twinned pipeline will be in service by 2017.
Two weeks ago, the company stated that it was partnering with Canadian-based midstream Keyera Corp. to build a crude rail terminal near Edmonton Alberta that will handle 40,000 bpd.
This was followed-up by a letter of intent with MarkWest Energy Partners LP to build midstream infrastructure in the Ohio Utica that will include a gas processing plant and a natural gas liquids (NGL) pipeline to bring hydrocarbons to the Gulf Coast for fractionation.
And this past week, Kinder announced that its new $250 million, 141-mile Parkway Pipeline that was built in partnership with Valero Energy Corp. has been placed into service. Initial capacity is at 110,000 bpd but can be expanded to over 200,000 bpd.
All of these activities attributed to a strong Q2 earnings report, where the Company stated a net income of $1 billion.
Though the Copano deal along with the purchase of El Paso Corp. in 2012 were major catalysts to Kinder’s earnings growth over the past year, the expansion also led to increased pipeline operations.
“Obviously, we’re very bullish on the future of natural gas in America,” Kinder’s CEO Richard Kinder said. “With our enormous footprint, we think that will put us in a position to grow dramatically across the coming years.”
The bottom line is, oil and gas pipelines are being built all over North America as we speak.
Whether the Keystone XL gets approved or not, there’s no stopping supply from reaching demand.
And that means that pipeline companies have a very bright future ahead of them.
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