Kinder Morgan Energy Partners, L.P. ( KMP - Analyst Report ) has joined hands with Martin Midstream Partners L.P. ( MMLP - Snapshot Report ) to build a multi-commodity rail terminal in the city of Pecos in west Texas.

The partnerships’ joint venture––Pecos Valley Producer Services LLC––will serve the flourishing oil and natural gas industry of the Permian Basin. Once the first stage of the terminal is commissioned, expectedly by May 2012, it will offer crude oil hauling, storage, takeaway and fractionation services. The joint venture intends to develop the natural gas and crude gathering and processing systems within the area.

The nation’s largest privately held short line railroad company––Watco Companies, Inc.––has been engaged for construction of the facility. Watco also retains the operatorship of the facility.

The terminal is expected to span 85 acres upon completion, located favorably along the Pecos Valley Southern Railway and directly adjacent to the Union Pacific mainline in the city of Pecos.

The railcars are estimated to have a capacity of 300 to 600 railcars per day based on demand. The railcars will help in transportation of crude oil, natural gas liquids, frac sand, pipe, tube, structural steel, rig mats and other commodities, which can later be transferred to trucks for delivery in the surrounding area.

Moreover, the joint venture has made initial plans to develop a train terminal, focusing on fracking sand to serve Reeves County and surrounding counties.

Kinder Morgan Inc. ( KMI - Analyst Report ) , one of the largest mid-stream energy companies in the U.S., owns the Kinder Morgan’s general partner interest. Kinder Morgan is one of the largest publicly traded master limited partnerships (MLP) 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 risks.

Kinder Morgan holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. For the long term, we maintain our Neutral recommendation on the stock.