ETP Completes NGL Pipeline - Analyst Blog

By Zacks | December 05, 2012 AAA

Energy Transfer Partners, L.P. (ETP) and Regency Energy Partners LP (RGP) announced the completion of Lone Star West Texas Gateway NGL Pipeline prior to its scheduled time. The pipeline was planned to be finished in the first quarter of 2013. It was a joint venture between the two partnerships in which Energy Transfer had a stake of 70%.

The start-up capacity of the 16-inch pipeline is 209,000 barrels per day, which can be increased. It stretches from Winkler County in West Texas to Energy Transfer's processing plant in Jackson County, Texas. The pipeline will transport natural gas liquids (NGLs) produced in the Permian and Delaware Basins in West Texas to Mont Belvieu, Texas.

Energy Transfer also declared the start-up of its 130-mile Justice NGL Pipeline which extends up to the fractionation facility owned by the Lone Star joint venture in Mont Belvieu. NGLs will be transported from Jackson County to this new facility.

Energy Transfer Partners is well positioned to compete in the natural gas midstream and transportation & storage businesses with its geographically dispersed asset mix. The partnership has a significant market presence in each of its operating areas located in major natural gas-producing regions of the U.S.

The acquisition of Philadelphia-based refining and petroleum product marketing company Sunoco Inc. will help Energy Transfer to diversify its asset mix by adding crude and refined products' pipelines to the partnership's existing natural gas and NGL infrastructure.

However, we believe that the near- to medium-term outlook for the partnership's natural gas gathering and processing business continues to be weak, which remains a major liability, in our view.

Energy Transfer currently retains a Zacks #3 Rank (short-term Hold rating). Longer term, we are maintaining our Neutral recommendation on the stock.


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