This Week in Midstream
Jun 8th 2012 5:41PM
Updated Jun 8th 2012 5:44PM
Midstream assets, specifically pipelines and processing centers, play a crucial role in America's energy future. The industry is growing rapidly, and may play a crucial role in the future of your portfolio. There are many companies to keep an eye on, and it's an industry worth watching. Here's what some of midstream's top dogs have been up to this week.
Let your love flow
One of my favorite midstream stocks, Enterprise Products Partners (NYS: EPD) , reported that two major projects are successfully flowing oil.
First up, the Seaway reversal. The pipeline that Enterprise co-operates with Enbridge (NYS: ENB) has officially been reversed, as crude oil reached the Gulf Coast via the conduit for the first time. Right now, the capacity of the Seaway sits at 150,000 barrels per day, which is not especially significant in the grand scheme of things. However, the successful Gulf Coast delivery means that plans are on track to ramp up capacity to 450,000 bpd by 2013.
Secondly, Enterprise's Eagle Ford Shale pipeline system is open for business, as well. Capacity here is 350,000 barrels per day, and it should provide a welcome reprieve to producers in the region who are currently trucking crude to refineries on the Gulf Coast.
Enterprise is currently outperforming fellow midstream giants Kinder Morgan, Enbridge, and TransCanada year-to-date, and remains worthy of portfolio consideration.
The world is not enough
In its continuing attempt to bail out the sinking ship, Chesapeake Energy (NYS: CHK) announced it would sell its stake in Chesapeake Midstream Partners (NYS: CHKM) for $4 billion. Global Infrastructure Partners is the lucky buyer. This makes sense because the private equity firm already holds a 50% general partner interest in CHKM, and 30% of its limited partner interests.
All the strings from this deal are expected to be tied into a nice bow by August. At that point, Chesapeake will have jettisoned $6.6 billion in assets this year, but that's still not enough to cover its cash shortfall. Not even close! Without further asset sales, the company remains $4 billion shy of making ends meet.
We have too much oil!
Midstream is where it's at, folks. The energy industry will spend an estimated $130 billion to $210 billion expanding natural gas infrastructure over the next 20 years. After all, the more oil and gas that flows through those pipelines and processing centers, the more cash there is to flow into your pockets. Stay on top of all the midstream action by adding the companies above to My Watchlist.
At the time this article was published Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy.The Motley Fool owns shares of Chesapeake Energy. Motley Fool newsletter services have recommended buying shares of Enterprise Products Partners and Chesapeake Energy. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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