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Black Hills (BKH) Arm Gets WPSC Nod to Build Gas Pipelines

Black Hills Corp.’s BKH natural gas utility subsidiary announced that it has received an approval from the Wyoming Public Service Commission (WPSC) to construct a 35-mile natural gas pipeline in the western U.S. state with a total capital outlay of nearly $54 million.

This natural gas pipeline will enhance the supply reliability and delivery capacity of the company, serving approximately 57,000 customers in central Wyoming. The pipeline, known as the Natural Bridge Pipeline, is expected to be online in late 2019.

Rising Demand for Gas Pipeline

The U.S. Energy Information Administration (EIA) forecasts that U.S. natural gas production, consumption and exports are expected to grow through 2019. The EIA anticipates average natural gas production to be 83.2 billion cubic feet per day (Bcf/d) for the year 2018, up 8.5 Bcf/d from 2017 level.

Moreover, the EIA expects natural gas production to witness growth in 2019 with average production reaching 89.6 Bcf/d. Also, the EIA anticipates the share of U.S. electricity generation from natural gas to rise from 32% in 2017 to 35% in 2018 and to 36% in 2019.

Ramped up production of natural gas in the United States and increasing replacement of coal-fired power plants with output through natural resources are likely to ensure strong demand for natural gas. Also, higher energy consumption by industrial projects natural is fueling this demand. The EIA is tracking the development of more than 160 proposed natural gas pipeline projects in the United States. Of these, 37 have been recently completed or are currently under construction and are anticipated to come online by the end of 2018.

Companies like Plains All American Pipeline, L.P. PAA and Buckeye Partners L.P. BPL are expanding pipeline infrastructure to provide transportation facility for growing natural gas demand. To this end, in 2018, Plains All American Pipeline has completed and placed Diamond Pipeline, STACK JV Pipeline and Sunrise pipeline into service. In addition, Buckeye Partners is constructing a new pipeline in the New York Harbor.

Price Performance

In the past six months, shares of Black Hills have returned 10.8% against the industry’s decline of 3.3%.

Zacks Rank & Another Key Pick

Black Hills carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Another top-ranked stock is Entergy Corporation ETR, a Zacks #2 Ranked player. It delivered average positive earnings surprise of 36.20% in the last four reported quarters. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 5.1% upward to $6.98 per share over the past 30 days.

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