KMP Closes Cochin Binding Season

Kinder Morgan Energy Partners, L.P. ( KMP - Analyst Report ) has successfully concluded its binding open season for the Cochin Reversal project. The partnership received strong backing for its new service to transmit light condensate from Kankakee County, Illinois, to existing terminal facilities near Fort Saskatchewan, Alberta, Canada.

The project, estimated to cost about $225 million, is intended to alter the western leg of Kinder Morgan’s Cochin Pipeline so as to link it to the Explorer Pipeline Company’s pipeline in Kankakee County. This will also enable the reversal of product flow in order to carry the condensate northwest to Fort Saskatchewan.

During the open season, Kinder Morgan booked binding contracts for over 100,000 barrels per day for a minimum tenure of 10 years. All these commitments have received board approval.

The incredible response to the open season goes to show the necessity of cost-effective access to light condensate from both the Eagle Ford and the U.S. Gulf Coast to the fast-emerging Canadian market.

The project is expected to come online by July 1, 2014 depending on the timely receipt of essential regulatory approvals and necessary capital improvements. During the open season, the hydraulic models were refined, making it viable for the Cochin Pipeline to carry approximately 95,000 barrels per day of light condensate capacity. The pipeline offers a new source of supply for the growing demand of light condensate.

Cochin is a 1,900 mile, 12-inch, multi-product pipeline operational between Fort Saskatchewan, Alberta, and Windsor, Ontario that passes through Canada and seven states in the United States. It currently carries propane and an ethane-propane mix to Midwestern United States and eastern Canadian petrochemical and fuel markets.

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 a Neutral rating on the stock. Kinder Morgan faces competition from Enbridge Energy Partners, L.P. ( EEP - Analyst Report ) and Enterprise Products Partners, L.P. ( EPD - Analyst Report ) .