Kinder Morgan's Palmetto Pipeline Receives FERC's Approval - Analyst Blog
Kinder Morgan, Inc. KMI announced that it has received consent for the rates, terms and conditions of service for the planned Palmetto Pipeline from the Federal Energy Regulatory Commission (FERC) on May 1, 2015. The company’s share price has been trending upward post-announcement and increased 0.9%.
Per the company, once the Palmetto is commissioned the savings will be much higher than current trucking or marine transportation. Kinder Morgan estimates that its southeastern consumers will be able to save as much as 6 cents per gallon after the Palmetto Pipeline comes online.
The planned Palmetto Pipeline is intended to transfer refined petroleum products from Baton Rouge, LA, Collins and Pascagoula, MS and Belton, SC to North Augusta, SC, Savannah, GA, and Jacksonville, FL. The system has been designed to have a capacity of about 167,000 barrels per day. The system will also comprise of a segment of expansion capacity that Palmetto will lease from Plantation Pipe Line Company between Baton Rouge, LA, and Belton, SC.
Moreover, the system will have provision for the construction of a new 360-mile pipeline from Belton, SC, to Jacksonville, FL. Pipelines are considered to be the safest and the most environment-friendly means to transfer refined products. In this respect, it must be mentioned that Kinder Morgan’s safety and environmental performance is much better than the overall pipeline industry.
The recent reorganization of Kinder Morgan companies into one has created the largest midstream company in North America. This will facilitate access to additional projects and lead to improved growth. We believe the size advantage provides the company with opportunities to build smaller adjacent pipelines at lower cost than peers. Further, increased demand for power generation and exports is expected to drive continued infrastructure build-out for the company.
Kinder Morgan currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the oil and gas sector such as Energy Transfer Equity, L.P. ETE, CNOOC Ltd. CEO and Hallador Energy Company HNRG sport a Zacks Rank #1 (Strong Buy).
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