Energy pipelines and terminals operator, Sunoco Logistics Partners LP (SXL) has declared the start of Mariner East 2 pipeline project’s binding open season. The open season is for shippers willing to carry natural gas liquids (NGL) from Marcellus and Utica Shale based processing facilities to the Marcus Hook Industrial area of Sunoco Logistics. The partnership expects the pipeline system to go online by early 2016.
Sunoco Logistics reveals that the shippers willing to make NGL volume assurance for a length of time will get premium services.
The partnership believes that natural gas production from the Marcellus and Utica Shale areas is in a state of continuous expansion. Moreover, Sunoco Logistics expects domestic LNG supply to continue to be more than demand in the near future, which is not lucrative for local producers at all, as it will bring down the price of LNG. Hence the producers are looking to transport LNG from the producing regions to the Marcus Hook Industrial area for export. Sunoco Logistics has found this situation profitable and intends to enter into the construction of the Mariner East 2 pipeline project.
Philadelphia-based Sunoco Logistics, a master limited partnership (MLP), acquires, owns, and operates a geographically diverse portfolio of refined product and crude oil pipelines and terminal facilities. Sunoco Logistics is organized into four segments – Refined Products Pipeline System, Terminal Facilities, Crude Oil Pipeline System, and Crude Oil Acquisition and Marketing.
With its low-risk and stable cash flow-generating energy infrastructure assets, Sunoco Logistics offers investors with an opportunity to capture income growth through steadily-rising cash distribution and capital appreciation.
However, weak refined products demand and refinery downtime – which adversely affects pipeline and terminal throughput – may present a risk to the cash flow estimates and lower Sunoco Logistics’ distribution growth rate.
Sunoco Logistics holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile one can look at better-ranked players in the energy sectors like Harvest Natural Resources Inc. (HNR), Matador Resources Company (MTDR) and SM Energy Company (SM). All the stocks sport a Zacks Rank #1 (Strong Buy).
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