Plains All American Pipeline, L.P. PAA has started conducting an open season for committed orders for the pipeline from Cushing, OK to Longview, TX to judge its commercial viability. The open season began on Jun 23 and will end on Jul 23, 2015. Following the announcement, units of the partnership inched up nearly 1% on Jun 24 but fell 1.2% till the closing session yesterday due to broader market fundamentals.
The proposed pipeline would start from Plains Cushing with an initial capacity to transport 120,000 barrels per day of light sweet crude oil to Longview.
At the same time, Caddo Pipeline LLC, a 50/50 joint venture between Plains All American Pipeline and Delek Logistics Partners, LP DKL, started conducting an open season for committed orders for the pipeline from Longview to Shreveport, LA. The duration of this open season is the same as announced by Plains All American for the Oklahoma-Texas Pipeline.
Pipeline construction involves intensive capital investments and an open season verifies the ground reality for pipeline operators. These actions will give the partnership a clear indication as to the long-term demand for transporting volumes via its pipelines.
Plains All American Pipeline maintains a systematic capital investment strategy to expand its operations through organic growth initiatives. In 2015, the partnership plans to invest $2.15 billion as expansion capital expenditure, up 16%.
Plains All American Pipeline completed several projects in 2014 and currently has a slew of new projects in resource-rich regions. In the Permian Basin, the partnership will invest $390 million in 2015. In the Delaware Basin, Plains started constructing its 16-inch line from the Barilla Draw area to Wink, and a 20-inch loop of its pipeline system from Blacktip to Wink. In Eagle Ford, the partnership expects to invest approximately $135 million in 2015.
Currently, Plains All American Pipeline is facing difficult times due to the oil spill that took place last month nearly 20 miles west of Santa Barbara in California. An onshore pipeline operated by the partnership ruptured and caused a leakage of nearly 101,000 gallons of crude oil. According to media reports, cleanup costs for the oil spill have climbed to $92 million so far.
Currently, Plains All American carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the industry include NuStar Energy L.P. NS and Buckeye Partners, L.P. BPL. NuStar Energy holds a Zacks Rank #1 (Strong Buy) while Buckeye Partners carries a Zacks Rank #2 (Buy).
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