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Is Energy Transfer Partners Likely to Close APL Pipeline?


According to a recent report on Reuters, pipeline operator Energy Transfer Partners ETP is likely to temporarily shut down a key pipeline that transports refined products into central Pennsylvania. This may prompt refiners in the area to reduce production in the upcoming months.

About the Pipeline

The 12 inch pipeline, known as APL pipeline, runs from two terminals in eastern Philadelphia to Reading. It was primarily owned by Sunoco Logistics, which later merged with Energy Transfer Partners. The pipeline is primarily utilized by refiner Philadelphia Energy Solutions Inc. and Monroe Energy, a subsidiary of Delta Air Lines, Inc. DAL.

Reason for the Shut Down

APL pipeline will be shut in mid-June and will remain closed for the next six to 10 months. The partnership will utilize the time to deal with the pipeline's integrity issues and increase its carrying capacity. Energy Transfer Partners will keep supplying refined products in the area through an alternative route.

Expected Aftereffects

The partnership is yet to comment on the volume of the substitute shipment and effect on pricing, if any. It might also lead to a reduction in refinery output, especially gasoline, due to increasing inventory and lack of spare capacity.

About The Partnership

Energy Transfers Partners is one of the largest Master Limited Partnerships in the United States. It has one of the most diversified portfolios of energy assets. The asset list includes 71,000 miles of crude oil, natural gas, natural gas liquids and refined products pipelines across 36 states. It also provides fractionation, storage, and terminalling facilities. The partnership is headquartered in Dallas, TX.

Price Performance

Energy Transfer Partners belongs to the Zacks categorized Oil and Gas – Production Pipeline – MLP industry. It’s units lost 9.57% over the last three months compared with the broader sector’s decrease of 5.53%.

Zacks Rank and Stocks to Consider

Energy Transfer Partners presently has a Zacks Rank #4 (Sell). Some better-ranked stocks in oil and energy sector are Penn Virginia Corporation PVAC and SunCoke Energy, Inc. SXC. Both of these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Penn Virginia’s sales for 2017 are expected to increase 27.30% year over year. The company recorded a positive earnings surprise of 49.02% in the first quarter of 2017.

SunCoke Energy’s sales for the current year are expected to increase by 10.58% year over year. The company had a positive earnings surprise of 120% in the first quarter of 2017.

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