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MarkWest Energy Partners, L.P. Message Board

  • moneyonomics moneyonomics Apr 3, 2014 1:05 PM Flag

    An analogy from Bakken to the problems KMP/MWE are having in securing commitments on the UMTP liquids line

    "Msg 136729 of 136737 at 4/3/2014 11:20:12 AM from ivbry board by


    Enbridge on Crude by Rail and Pipeline

    Crude by rail to keep some barrels away from US pipelines: Enbridge official

    Houston (Platts)--2Apr2014/326 pm EDT/1926 GMT....People are now looking at the fact that the capacity is going to be built," he said. "We are going to have common carriage capacity available as part of that program that they can access. So many of them are simply content to rely on competing for the common carriage capacity......

    It is difficult to secure long-term contracts for new crude pipelines in the Bakken, he said...."

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    • I recall the new ETE proposal for Bakken crude offers 5, 10, and 15 year commitments. This has been one issue the rails have had over pipeline in the past so it will be interesting how this proposal works out.
      Another issue is the rails have bent over pretty good appeasing the left-wing green issues to some extent.

      The tank car issue is being addressed, though it may take two or more years to build out with substitutes for the specific DOT 111 cars. As I recall, NSC is using only the best cars now to transport crude into the northeast markets. Rails have agreed to slow train in populated areas, among other things. According to a recent Downstream article, Canada says they can move much faster to retrofit cars than the US, primary reason is the US just has too much government bureaucracy. The UN clowns are now looking at all haz. mat. being transports. Folks like Putin love distractions.

      Depending upon the origination and terminus, about the only thing rail have working against them is the variance between wti and brent, and they cannot haul ethane. The wti Vs. brent issue has driven me crazy as of late while holding DAKP. Frankly, I like the use of both modes when and where applicable. Another issue rails have failed in the past is good due diligence of future E&P prospects. One area they should be looking and planning now is for potential crude shipments from Northern Nevada. NBL is currently looking into the issue now and sure they have already spoken with UNP for shipment to west coast refineries should the play work out.

    • Another example is the failed pipeline proposal by KMP for a billion dollar pipeline from the Permian West TX area to CA refineries...the CA guys said No preferring our friends at Genesis Energy put in a very busy RR crude loading facility at Wink,TX, near NM...GEL also has a big RR loading facility for crude from the Niobra shale in SE WY. When you have to sign up for 15 years to a pipeline company versus the flexibility of rail, it's something to think about...especially when you think of how Boardwalk cratered because its' natural gas pipelines to the NE were devastated by the success of Marcellus producers...

      • 2 Replies to ake05bono
      • i think personally that MWE presently does not need the distraction of KMP/MWE pipeline until somewhere in 2017-18 time frame. KMP needs to do something serious as get rid of IDR or break the company along CO2/terminals/pipelines/Canada/ etc IPO's. They are a conglomerate and the too big to fail has cost them pricewise. When they have a planned CAGR of 5% in the golden era of companies at 10-25% CAGR they become the GE of mlp's or watch paint dry analogy. Once again for all the jump ship and patience group PAA and EPD and ETP went though the 3 year build my company phase with no dramatic price improvement . ARB has a MWE dissertation and is right on about the financial impact of all MWE projects and DCF over enthusiasm and impact of too much to fast contracting price etc. What advice I gave early last year to buy 2016 Jan in the money options and conserve money and stay the course still holds for some. The biggest negative for the flag wavers is they missed the golden era boat that is sailing for NGLS/TRGP-OILT/MMP/WES/ ACMP-ETE etc

      • Yup. Think lately we have more pipes that are failing to get committments than are being built. Neither WPZ/BWP or KMP/MWE going forward now with line out of Marcellus. Definately wonder how long till more rules with the RRs get put into place with the accidents that have happened. At home the SP main line goes through the center of downtown - 400K people within a couple miles. Accident rate per car mile is down, but loadings up some 9X.

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