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Plains All American Commences Open Season for New Pipeline


Plains All American Pipeline, L.P PAA has started an open season to gauge the demand for its planned new crude oil pipeline extending from Permian Basin to Cushing, OK.

Duration of the Open Season

The midstream service provider’s open season began on Apr 18 and will end on May 30,giving enough time for interested upstream companies to come forward and sign up for a portion of the pipeline’s capacity rights.

The proposed pipeline will have origin points at Midland, TX and Colorado City, TX and will deliver crude oil to the storage hub in Cushing. If Plains All American gets required contracts from upstream operators with no hold back from regulatory bodies, the project could bring as many as 350,000 barrels of oil a day to the market by mid 2019.

The open season offers better visibility towards success of a new pipeline as it shields a pipeline operator from incurring losses because of a dearth of customers.

Open Season from a Peer

In Mar 2017, Kinder Morgan, Inc. KMI started the non-binding open season for its Gulf Coast Express Pipeline project. (Read more: Kinder Morgan Starts Gulf Coast Pipeline Open Season)

JV to Expand Operation

In the first week of April, Plains All American and Noble Midstream Partners LP NBLX announced the completion of Advantage Pipeline, LLC buyout for $133 million. This acquisition put both the midstream service providers in an advantageous position as the acquired pipeline operates in a liquid-rich area. (Read More: Plains All American & Noble Midstream Close Advantage Deal)

Plains All American is willing to expand its storage capacity in Cushing, OK. It is looking forward to invest about $30 million in 2017 to add around 2 million barrels of crude storage capacity.

Price Movement

In the last one year Plains All American’s units returned 24%, outperforming the Zacks categorized Oil/ Gas Production Pipeline MLP industry’s gain of 13.5%.

With the recovery in the price of crude, the partnership is expected to perform well in the coming days and the units are expected to fetch better returns.

Zacks Rank and Stocks to Consider

Plains All American carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Boardwalk Pipeline Partners L.P. BWP carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Boardwalk Pipeline Partners LP’s 2017 Zacks Consensus Estimate moved up by nearly 1.5% to $1.33 per unit in the last 60 days.

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