Kinder Morgan to Expand BOSTCO

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Midstream giant Kinder Morgan Energy Partners, L.P. (KMP) is likely to add 900,000 barrels of storage to its $485 million Battleground Oil Specialty Terminal Company LLC (:BOSTCO) project on the Houston Ship Channel, which is under construction. This is a joint venture between Kinder Morgan and TransMontaigne Partners L.P. (TLP), with the former as the operator with 55% share.

The expansion of BOSTCO includes six 150,000-barrel ultra-low-sulphur diesel tanks, new pipeline and deepwater vessel dock access and a faster loading rate. The expansion will be supported by a long-term contract with Morgan Stanley Capital Group Inc and is estimated to cost $54 million.

While this expansion to the 185-acre BOSTCO is expected to commence in the second quarter of the current year, it is scheduled for commissioning in the fourth quarter of 2014. The facility is slated for a third quarter 2013 start-up.

Upon completion, the terminal will have a 7.1 million barrel capacity, which is expected to be fully subscribed. The terminal will comprise 57 storage tanks to manage diesel, residual fuel and black oil, with further capacity to boost storage by 3 million barrels. Currently, BOSTCO has employed over 700 local contractors and another 75 full-time employees will be required to manage the facility on its completion.

The general partner of the partnership is owned by Kinder Morgan, Inc. (KMI) – the largest midstream and the third largest energy company in North America. It has a combined enterprise value of around $115 billion and owns interest or manages about 80,000 miles of pipelines and 180 terminals.

Kinder Morgan carries a Zacks Rank #3 (Hold). However, Zacks Ranked #1 (Strong Buy) Enerplus Corporation (ERF) appears more attractive as it is expected to outperform over the next few months.

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