Plains All American Pipeline LP (PAA) decided to continue with the Phase IV expansion of its St. James, Louisiana terminal facility, which was originally commissioned in 2007. The expansion is expected to be completed in the third quarter of 2012.
The decision to expand the storage capacity is a part of the partnership’s long-term strategy to increase its cash-flow contributions from fee-based activities. The partnership has been able to secure multi-year contracts and throughput arrangements with third-party customers for the projects. The estimated cost for expansion of the project is $50 million.
The St. James facility is strategically located near the Mississippi river,and has a barge and ship dock, enabling it to receive crude oil and condensate from ships and inter-coastal barges. This facility is also connected with a crude oil rail terminal, having a capacity to offload 65,000 barrels per day, which will doubled to 130,000 barrels per day by the fourth quarter of 2011.
The facility became operational from the first quarter of 2007, with a storage capacity 3.5 million barrels. The Phase II expansion added 2.7 million barrels to the storage capacity while Phase III added a further 0.9 million barrels. This Phase IV expansion will increase the storage capacity of the facility by 1.2 million barrels to 8.3 million barrels.
The total monthly average storage capacity of the partnership at the end of the second quarter 2011 was 82 million barrels, up 12 million barrels year over year. We believe the St. James expansion will enhance the capacity of the partnership to tap the growing Louisiana market.
Plains All American Pipeline currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating. The partnership competes with Enterprise Products Partners LP (EPD) and Sunoco Logistics Partners L.P. (SXL).
Houston, Texas-based Plains All American is engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. The partnership is also involved in the development and operation of natural gas storage facilities.
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