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Plains All American (PAA) to Boost Cactus Pipeline Capacity

Plains All American Pipeline, L.P. (PAA) plans to increase the takeaway capacity of its Cactus Pipeline. The partnership will add pumps, booster stations and pipelines at the facility. It expects to conclude the expansion project in fourth-quarter 2015.

Upon completion, the throughput capacity of the pipeline will increase to around 330,000 barrels per day (bpd) from roughly 250,000 bpd. Plains All American plans to invest $0.35 billion in 2014 for this project.

The project aims to meet the projection of higher production and increase in shipper demand in the region.

In Apr 2013, Plains All American had announced that it will construct a crude oil pipeline, the Cactus Pipeline, between McCamey and Gardendale, TX. The 20-inch pipeline will span 310 miles (498.9 kilometers). Initially, the pipeline will carry roughly 200,000 bpd of crude oil, which will scale up as and when required. The pipeline is expected to be online in Apr 2015.

Plains All American has continuously increased Cactus Pipeline’s capacity to meet higher demand of midstream services and shipper demand. In Dec 2013, the partnership had stated that it will install additional pumping capacity to the Cactus pipeline, to increase its capacity to 250,000 bpd.

This latest project, together with the Eagle Ford Joint Venture Pipeline expansion venture jointly developed with Enterprise Products Partners L.P. (EPD), will help Plains All American to transfer higher production volumes from the Permian Basin to Corpus Christi and other delivery points.

Plains All American follows both organic and inorganic programs to strengthen its presence in the mineral-rich regions in the U.S. In 2014, the partnership intends to spend $1.95–$2.15 billion as organic capital investment.

On Nov 5, 2014, the partnership announced that it will build a new pipeline from Duncan, OK to Longview, TX. It is expected to complete in the second quarter of 2016. Upon completion, the pipeline will deliver crude oil to the refineries in Oklahoma, East Texas and Shreveport from the Permian Basin and Cushing.

As far as inorganic growth projects are concerned, on Nov 14, 2014, Plains All American acquired 50% interest in BridgeTex Pipeline Company LLC. from Occidental Petroleum Corp. (OXY) for $1.075 billion.

Plains All American maintains a stable liquidity position along with a strong cash generation capacity. The partnership had total available liquidity of around $2.55 billion as of Sep 30, 2014 and an operating cash flow of around $1.28 billion in the first nine months of 2014. A favorable financial position supports Plains All American’s steady investments in growth ventures.

Plains All American currently has a Zacks Rank #3 (Hold). Another better-performing stock from the same industry is Atlas Pipeline Partners L.P. (APL), carrying a Zacks Rank #2 (Buy).

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