Pipeline operator Kinder Morgan Energy Partners LP (KMP) has decided to make an investment of $106 million to purchase about 20 acres of land near its Pasadena terminal, Texas.
The partnership proposes to build nine new tanks and a new barge dock at its Galena Park terminal. Each tank will have a capacity of 1.2 million barrels and have long-term customer agreements.
The new barge dock is likely to alleviate the current bottleneck at the Houston Ship Channel. It will also augment the existing infrastructure at the Pasadena terminal by providing additional handling capacity to about 50 barges per month.
The purchase of the new acreage is an effort to support a future crude condensate and refined products terminal competent of managing 10 tanks, each with a capacity of 150,000 barrel. This project would be linked to the Explorer Pipeline.
The projects are in response to the growing yield from the Eagle Ford shale oil play in Texas. This has prompted the immediate consideration to build new infrastructure and help in carrying the additional yield to the markets.
Kinder Morgan is the largest independent owner and operator of petroleum product pipelines in the U.S. Its pipelines transport natural gas, refined petroleum products, crude oil, carbon dioxide and other products, while its terminals store petroleum products and chemicals and handle bulk materials such as coal and petroleum coke. The terminals store petroleum products and chemicals, apart from handling bulk materials such as coal and petroleum coke.
Kinder Morgan carries a Zacks Rank #3 (Hold). However, there are other stocks in the oil and gas industry like Dawson Geophysical Company (DWSN), SM Energy Company (SM) and Exterran Holdings, Inc. (EXH) that appear more attractive in the short term. All three stocks carry a Zacks Rank #1 (Strong Buy).
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