This Week in Midstream
Midstream assets, specifically pipelines and processing centers, play a crucial role in America's energy future. The industry is growing rapidly and may play a crucial role in the future of your portfolio. There are many companies to keep an eye on, and it's an industry worth watching. Despite the holiday, there was plenty of news this week; here's a recap of the highlights and lowlights.
Kinder Morgan Energy Partners (NYSE: KMP) signed 20-year agreements with a slew of customers who want to ship oil to Western Canada via the company's Trans Mountain pipeline. The commitments bring the pipeline's contracted capacity up to 508,000 barrels per day. Of course, they are only valid if Kinder Morgan is able to get the pipeline's expansion approved. Right now the line is only capable of carrying 300,000 barrels per day, and is frequently oversubscribed.
Getting approval won't be easy given how unpopular pipelines are right now. Most of the oil headed to the Trans Mountain comes from Alberta's oil sands, increasing the likelihood that environmental opposition will stall, or completely stymie, the company's plan.
We can build this dream together
TransCanada (NYSE: TRP) got some more good news regarding its Keystone XL pipeline this week. In the spirit of Jefferson Starship's "Nothing's Gonna Stop Us Now," the company secured its second required permit from the U.S. Army Corps of Engineers to develop the southern section of its infamous pipeline.
That only leaves one more permit to acquire before construction can begin. That permit process has been delayed, as the Fort Worth Army Corps office has requested more information from TransCanada. Eventual acceptance is expected.
Another pipeline IPO
The Marathon family of companies continues to grow. After Marathon Oil (NYSE: MRO) and Marathon Petroleum (NYSE: MPC) split last year, MPC announced it still feels too whole. The company has filed IPO paperwork for its midstream subsidiary, MPLX LP. The new company will trade under the clever ticker MPLX, and nearly all of its business will come from handling Marathon Petroleum's refined products.
The company is seeking an IPO on the New York Stock Exchange and plans to sell common units worth $365 million.
Midstream is where it's at, folks. The energy industry will spend an estimated $130 billion to $210 billion expanding natural gas infrastructure over the next 20 years. After all, the more oil and gas that flows through those pipelines and processing centers, the more cash there is to flow into your pockets. Stay on top of all the midstream action by adding the companies above to My Watchlist.