SemGroup Corporation SEMG announced that it will build, own and operate three new pipelines in the U.S. Gulf Coast region of Louisiana. Collectively, these pipelines will come to be known as the Maurepas Pipelines. The new pipelines will support Motiva Enterprises LLC’s (Motiva) efforts to interconnect and optimize its refinery operations.
Recently, Motiva announced plans to integrate two of its Louisiana refineries – Norco and Convent – creating the Louisiana Refining System. The Maurepas pipeline system will play a key role in the integration.
At an investment of $500 million, the project will expand SemGroup’s service capability and customer base. These pipelines have long-term transportation agreements with Motiva and are expected to be operational in the fourth quarter of 2016.
Maurepas Pipelines will include a 24-inch, 34.2 mile crude oil pipeline connected to LOCAP, crossing the Mississippi River and terminating at Motiva's Norco refinery; a 12-inch, 35 mile intermediates pipeline between Motiva's Norco and Convent refineries; and a 6-inch, 34 mile intermediates pipeline between Motiva's Norco and Convent refineries.
This infrastructure investment will make SemGroup Corporation a more diversified midstream company with an inventory of assets that can be dropped down to its MLP, Rose Rock Midstream RRMS.
Increasing oil and gas production in North America will drive demand for refineries and pipeline services and act as a tailwind for the midstream service providers. SemGroup’s foray in the oil-rich Gulf Coast region will yield strong returns for both the company and its stakeholders.
SemGroup Corporation currently has a Zacks Rank #2 (Buy). Other well-ranked stocks in the same space are Southcross Energy Partners, L.P. SXE and EQT Midstream Partners, LP EQM, both with the same rank as SemGroup.
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