A unit of Kinder Morgan Energy Partners, L.P. (KMP), Tennessee Gas Pipeline Company, L.L.C., has inked a binding 20-year firm transportation standard agreement with Japan’s Mitsubishi Corporation.
Per the agreement, Mitsubishi will transport 600,000 dekatherms per day of natural gas designated for the planned Cameron LNG liquefaction facility in Hackberry, La. The facility is scheduled to commence LNG exports in the second half of 2017.
Mitsubishi will act as the foundation shipper for Tennessee’s Southwest Louisiana Supply Project, which is intended to offer shipping from various supply basins in Ohio, Pennsylvania, Texas and Louisiana to Cameron Interstate Pipeline that connects directly to the Cameron LNG Terminal.
Kinder Morgan is not the owner of Cameron Interstate Pipeline or the Cameron LNG facility. The Southwest Louisiana Supply Project is planned to provide transportation to the booming southwest Louisiana market. The project comprises further interconnections with shale supply, new pipeline laterals and augmentation to Tennessee’s existing pipeline system to facilitate bi-directional flow to the region. Tennessee is likely to carry out a binding open season for additional interest in its project at a later date.
The Tennessee partnership with Mitsubishi will assist the former in expanding its foothold as well as connecting the conventional and shale supply areas from the South Texas Eagle Ford to the Utica and Marcellus in Ohio and Pennsylvania. It will also improve access to the Haynesville shale supply area and the Perryville Hub in Louisiana, making the Southwest Louisiana Supply Project suitable for the latest Mitsubishi-Kinder Morgan tie up for the Cameron LNG facility.
Kinder Morgan carries a Zacks Rank #3 (short-term Hold rating). However, there are other stocks in the oil and gas industry like Dawson Geophysical Company (DWSN), InterOil Corporation (IOC) and Exterran Holdings, Inc. (EXH) that appear more attractive in the short term. All three stocks carry a Zacks Rank #1 (Strong Buy).
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