Our GEL is growing up replacing among others the "Over the Cliff" Boardwalk MLP! When the index is rebalanced on March 21, we GEL holders should see I higher trading volumes and hopefully a higher unit price as index funds add GEL units. Kind of neat getting confirmation that GEL is growing in a controlled, well thought out way..
I see this and just marvel at APL sinking a $Billion into Eagle Ford when at roughly a $150 million each it could have built six plus 200 million cuft/day cryo units supporting Pioneer and others.....
CVX selling its' share of the West TX LPG Line is just a small part ot its' multi $Billion asset disposal program to raise funds for exploration and development. It's less than 10% of what CVX is trying to sell..why APL bought into the line is really a good Q. With the DCP Enterprise,EPD,and Targa already in the area BIGTIME APL is at best just minnow class. An even worse APL investment IMO was the $Billion outlay for the Eagle Ford action. Talk about a "Bridge too far"!!! Far better, IMO would have been staying with the organic growth in OK and West TX and making a ton of dinero...the low pricing of NGL will pass..in the next 3 years some 15 new or modified crackers along the GulF Coast will be using in excess of 800,000 barrels of ethane/day. And with the Panama Canal expansion back on track, Asia will be sucking NGL like crazy in 3 years,too. With Team Obama still dedicated to eliminating every coal generator in sight, there's a lot of coal fired action in Texas that will shift to natural gas,too. So, my sense is that APL will limp along for another 2 years before the dawn breaks. Meanwhile, the distribution rate is OK, and the business income losses generated are a nifty entry on my tax forms.
I feel the same way...my bet on AB is really a bet on the AB overseas position..with all the wealth in Asia I think AB's ability to invest worldwide should appeal to that capital pool..the recent acquisition of the Danish asset mgr should help attract euro funds as well. Were I running AB I would be setting up shop wherever the guns were firing...latest office would be in Kiev looking for scared capital that wants a safe haven! Greece going down? AB's Athens office should score. Caracas burning? AB Venezuela if there is one should be doing gangbusters!! Getting nervous in Argentina? Try AB Buenos Aires! You get the picture...a click of the mouse and AB can invest your pesos, your Yuan, your yen in Swiss bonds etc etc...I think there is an excellent chance that AB could deliver $2+ this year....
My sense is that most analysts got burned so badly on AB when it was falling from $80+ to $11 or so that they are being super cautious on AB as it has been slowly coming back. To get a "buy" rating or a "out perform" rating AB will IMO REALLY have to be outstanding.
Current estimates for AB are around $1.75 for 2014. Let's say Q4 is $0.60 again. That leaves $1.15 split three ways or around $0.40/Q...So yes, I think Q1 likely to be $0.40 and PPS falling to $22.
I'm delighted to read your note about getting into MMP..my experience was much the same..I was looking at some storage tanks near our town and wondered which firm owned them. Finding Magellan on the Internet I said, "Why not" bought a few units..then a bunch more...My wife calls her new Lexus "Magellan"...as for me I think of that TV commercial that talks about "gelling"...we're definitely "Gelling!!!"
The EIA is reporting that the USA inventory is running like 25 million barrels of propane below this time last year...obviously, both weather and exports are contributing to this shortage...and I have to believe that most of the railroad tank cars being built these days are committed to hauling crude oil instead of propane,too. So, it's both supply and logistics that need support..the SXL guys made a good point that storing propane at Marcus Hook for export would create a reserve that could be used in the NE when another cold spell hits...and there is obviously a need for big propane tanks in the upper Midwest in support of corn drying...that DPM is a major producer of propane ,has a wholesale propane operation,
and has a propane export terminal in the making may help here. MWE and its' propane producer customers have got the market wired at least in the NE. When EPD reversed the TEPPCO pipeline to haul ethane from the Marcellus to TX replacing propane going from TX to the NE it really distorted the propane market in the NE. Upper MIdWest needs trucks and rail tankcars,too.
With Boardwalk going over the financial cliff jou have to believe that if a Y pipeline to the Gulf goes commercial it will be the KMP/MWE entry. Bluegrass pipeline IMO is now DOA. That said, I'm guessing that the propane shortages in the snow belt are causing a lot of folks to study whether more fractionation in the Marcellus/Utica is a better course of action than shipping Y grade to the Gulf Coast for fractionation and export. That the government might get involved is probably weighing on everyone involved in NGL production,too.
It's great to be in the Warren Buffet gossip columns...but I still believe that MWE and my $s are better off being independent right now. I'm betting that the MWE projects coming online this year will make 2015/2016 stellar years for MWE...and if Buffet wants MWE in 2017 I'll take $100/unit for half my holdings. I also own a bunch of PAA units that Buffet can buy....and if he really wants to go after $60 Billion market cap EPD he can buy my units there,too. I have always wondered why EPD didn't buy MWE a few years ago when the Marcellus started looking good..IMO the potential fit between EPD and MWE is remarkable. Buffet could merge the two of them and truly dominate the midstream area....
There is absolutely no doubt about there being enough ethane in the Marcellus/Utica to support several crackers...but keep telling yourself that a) it takes five years to build a grass roots cracker..think 2019/2020..and b) you have to have downstream polyethylene units to use the cracker produced ethylene,film lines to use the polyethylene etc etc. IN THE MEANTIME: NOVA in Sarnia will be taking 50,000 barrels/day of ethane by Q2 of THIS YEAR. Ineos will be taking 40,000 or barrels/day of ethane via Marner East for its' two European crackers at Grangemouth,Scotland, and Norway starting in 2015, and by 2017 the sixteen crackers being built for or converted to ethane on the Gulf Coast will be taking 800,000 barrels/DAYof ethane via ATEX etc etc. NOVA is already getting ready to build a second cracker, and you know that there will be other crackers in Europe going to ethane...and with the Panama Canal expansion back on track as of last week, the Panamax ships will be hauling ethane to China within 3 years. ...so,hey, whether Shell really builds a cracker in PA will have a minimal effect on MWE..it's chicken feed..the only real benefit is that extracting ethane results in 8% more propane being recovered...and since propane is worth 8x or so more than ethane MWE can score nicely no matter who gets the ethane....
Driving propane upwards isn't just the weather: the almost $30/barrel difference in propane pricing between the USA and Saudi Contract Price in 2013 resulted in USA export of propane reaching 110 million barrels. This is up from a measly 5 million barrels exported just 5 years ago in 2008. By the end of 2014 EPD and Targa alone will have an export capacity of 160+ million barrels/year. Add in Mariner East and DPM Hampton Roads and USA propane export capacity will be pushing 200 million barrels/year. And with EIA reporting that USA propane inventories are 25+ million barrels lower than at this time in 2013 you can bet that MWE and producer customers like Antero and Range are cranking kout all the propane they can. Antero sucking up another 200million cuft/day cryo plant at Seneca means that between Sherwood and Seneca aggressive Antero will account for a third or so of MWE's cryo capacity. MWE IMO will hit DCF outta da park in the next 2years unless the White House Team starts regulating propane exports.
Thanks Rubybell...that SXL transcript had a REALLY important nugget in it IMO..that was the comment that SXL sees more value in having the basic NGL stream in the Marcellus etc fractionated in the field, I.e. at MarkWest Houston(PA) etc instead of bringing a Y stream of mixed NGLs to Marcus Hook and fractionating it there. Since Marcus Hook is a large 800 acre or so refinery site all the basic infrastructure is in place to install a coulple of fractionation towers. Instead SXL will take batches of fractionated ethane,propane,and butane from Markwest and store/ship from Marcus Hook. Marcus Hook is also unusual in that it has five big storage caverns laboriously jackhammered out of the underlying granite by hand. They used to hold imported oil but will no be used for propane etc. Having such a big storage facility is great as SXL pointed out to have big stocks of propane available for shipment to the NE in case of another tough winter. A neat CC, and thanks again!
Compared to what? Texas has no state income tax,is generally regarded as the best State in the Union to do business in,, and is an excellent home for MLPs...it also has an excellent attitude about energy and is home to the bulk of the USA refining industry...no "NIMBY" in TX. I have made a ton of money in Texas,and will be there on business.next week. I also have done business deals in multiple other states but have yet to find one as conducive to business as Texas. One fact about Texas I think could be considered quirky is that Houston has no zoning requirements...you got the money,you can build it...works surprisingly well. Regarding ETP vs EPD...Texas has a lot of experience in energy, and will render a good verdict that will start the appeals process. I'll take a Texas courtroom over California,NY,PA etc etc anytime.
What a wonderful article..thank you,, an elegant solution to the relatively shallow Delaware River on the Marcus Hook area. Having these new ethane capable tankers start with shipments to the Ineos Rafnes,Norway cracker in 2015 followed by shipments to the Ineos cracker in Grangemouth,Scotland opening in 2016 means that Mariner East 2 is probably going to happen,too. It also should force other Euro crackers to convert to MWE extracted ethane in subsequent years. Too bad the technical solution is being provided by Chinese shipbuilders instead of the Philadelphia Shipyard guys just upstream frm Marcus Hook!!
Thanks,Dreiser..neat article...kind of interesting to see the paragraph regarding Exxom/Mobile shifting crude oil intake at Baton Rouge refinery from ruptured Pegasus pipeline to barges etc...that refers,of course, to GEL's Port Hudson barge terminal, new pipeline, and Scenic Station RR unloading facility servicing that refinery. No question strategically that GEL's barge acquisitions were done beautifully,timely, and VERY profitably, I agree with you that GEL is shaping up to be a $60+/unit MLP. It's also good that size wise GEL's barge group is in the same league as PAA's and compares favorably with MMLP's. I do believe we'll see additional organic growth in barges and perhaps another acquisition. Also,noteworthy is that GEL has a particular affinity for the Mississippi area in both RR and barge operations...think Natchez,Scenic Station,Raceland,and Walnut Hill in RR and the big barge operation in an integrated fashion. Commercializing the GOM pipeline with EPD will jack up the DCF,too. With Pronghorn commercial, it's time for GEL to announce another wave of projects to keep momentum going. I really look forward to the next CC! Best Regards
Thanks. That's really fascinating..you have to wonder whether the producers are beginning to worry about the global economy going South in the next few years and not wanting to be caught with long term contracts...an intriguing alternative possibility is that Shell might be having quiet discussions with ethane producers about it actually building that PA based cracker..it would take 5-6 years for the cracker to go commercial. However, shipping a barrel of ethane to Mont Belvieu can't be cheap relative to the current low price of ethane. And if a producer could pocket the transportation cost in five years versus a 15 year transportation contract that pipeline producers seem to want it might be worth it. Again, thanks for purring this up...I just can't get over the twists and turns in this business!
You are right; completing Hopedale is a VERY big deal. I note that MWE was trucking NGLs to Shiloam from the Marcellus and Utica for fractionation. It was also obvious from the scheduling that MWE was rushing to complete Hopedale on an accelerated basis...think much overtime,extra manpower etc in mid winter..but on a BIGTIME positive note: residential propane prices in the NE according to EIA are up 80 cents/GALLON compared to last year...that's $34/barrel!!....and nationwide propane stocks are down 25 million barrels !! There is only an 18.5 day supply of propane available nationwide vs 35.7 day of supply last year. This reflects 1. Much higher corn drying requirements this winter 2. The sensationally cold winter and 3. The massive sucking effect on propane by the expanded EPD and Targa export terminals in Mont Belvieu and Galena Park,TX,respectively...to say that MWE can find a home for every barrel of propane it can produce for years to come is a real understatement! Now, what's going to be real interesting is whether MWE announces a new 60,000 barrel/day c2+fraction train for the Marcellus/Utica area or just ships it all of its'future NGL action via the Y grade KMP/MWE/EMG pipeline to Mont Belvieu and the Targa fractionation facility...
EPD hasn't lost anything; the trial just started. Secondly, all corporations are constantly considering multiple opportunities all the time. So what if going with one possible project kills others? What this will boil down to is the written MOU (Memorandum of Understanding) between EPD and ETP. While a jury may not understand the intricacies of a MOU the appeals courts will. This dispute will not be settled anytime soon. Finally, EPD will not cut off distributions because of this case. This pipeline isn't big enough to dent the EPD DCF. So just go back in your cave and quiet down.