Midstream giant Kinder Morgan Energy Partners, L.P. plans to spend about $107 million to expand the Kinder Morgan Crude and Condensate (KMCC) pipeline system further into the Eagle Ford Shale play in Karnes County, Texas.
The 178-mile (286 km), 300,000 bpd pipeline, which transfers crude and condensate yield from the Eagle Ford shale play in Texas to the Houston Ship Channel, commenced operations a year ago. The KMCC pipeline is expected to be extended by 31 miles (50 km) from Kinder Morgan's station in DeWitt County, Texas, to ConocoPhillips' central delivery facility near Helena, Texas, in Karnes County.
The expansion is expected to commence operations in Jul 2013, is supported by a long-term contract with ConocoPhillips (COP - Free Report) . Kinder Morgan also intends to construct receipt tanks and a truck unloading facility close to ConocoPhillips’ Helena Central Delivery Facility.
The project – estimated to be completed in the third quarter of 2014 – is likely to be immediately accretive to cash distributable to Kinder Morgan unitholders. The extended pipeline will offer further flexibility to its customers looking to transporting crude and condensate from Karnes County to Houston-area markets.
The expansion will also assist the partnership in realizing its goal of shipping about 300,000 barrels per day of crude and condensate from the Eagle Ford Shale.
The general partner of the partnership is owned by Kinder Morgan, Inc. (KMI - Free Report) . Kinder Morgan is the largest midstream and the third largest energy company in North America. It has a combined enterprise value of around $115 billion. It owns interest or manages about 80,000 miles of pipelines and 180 terminals.
Kinder Morgan carries a Zacks Rank #2 (Buy). However, Zacks Ranked #1 (Strong Buy) Enerplus Corporation (ERF - Free Report) appears more attractive as it is expected to outperform over the next few months.