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EPD Mont Belvieu Project On Track

Zacks Equity Research

Midstream energy service provider, Enterprise Products Partners L.P. (EPD) is steadily progressing with the development of a project to transport diluent-quality natural gasoline from its Mont Belvieu, Texas liquids storage complex to several potential delivery points in and around Chicago. This project will add new connections to the partnership’s pre-existing Southern Lights and Cochin pipelines.

The partnership’s started focusing on the project after the positive response from shippers soliciting long-term transportation agreements for Southern Lights and Cochin. While the Southern Lights extension is expected to begin service during the fourth quarter of 2013, the Cochin connection will likely be online in the second quarter of 2014.

The existing Southern Lights pipeline provides continuous capacity for the transportation of diluent from Chicago, Illinois, to Edmonton, Alberta, and has an average annual capacity of 180,000 bpd. While Cochin is presently a 1,900-mile, 12-inch, multi-product pipeline operational between Fort Saskatchewan, Alberta, and Windsor, Ontario that passes through Canada and seven states in the United States. It carries propane and an ethane-propane mix to Midwestern United States and eastern Canadian petrochemical and fuel markets.

As Eagle Ford Shale is gaining traction, pipeline companies and midstream operators are increasingly looking to the South Texas play for opportunities to build new networks. Enterprise is poised to benefit from its existing assets and new developments, like the Texas Express Pipeline project, in providing packaged services to producers in emerging shale plays.

Enterprise Products Partners, a leading master limited partnership (MLP), is engaged in a wide range of midstream energy services to producers and consumers of natural gas, NGL, and crude oil. With its diverse set of midstream infrastructure assets, we believe the partnership possesses fundamental strengths, which will in turn support distribution growth consistently.

The partnership currently holds a Zacks Rank #2, which is equivalent to a short-term Buy rating. There are other stocks in the oil and gas sector – Enbridge Energy Management LLC (EEQ), Kinder Morgan Energy Partners, L.P. (KMP) and Kinder Morgan Management LLC (KMR)  – which hold a Zacks Rank #2 (Buy) and are also expected to perform better than the broader market.

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