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Tickers in this Article: EPD, KMP, EEP
Kinder Morgan Energy Partners, L.P. (KMP) announced the commissioning of its crude oil and condensate pipeline to ship the increasing oil and condensate production from the Eagle Ford, Texas region to the Houston refining hub. The partnership successfully completed the $215 million pipeline project on time and within budget, and expects it to be immediately accretive to cash available to KMP unitholders. This huge Kinder Morgan crude/condensate pipeline (KMCC) - with a capacity of 300,000 barrels per day (BPD) - includes 65 miles of new-build structure and 113 miles of converted natural gas pipeline. It will distribute supplies into terminalling facilities that feed local refineries, petrochemical plants and docks along the Texas Gulf Coast.

Additionally, it will be further connected to a planned $200 million condensate processing facility. This unit will be constructed near Kinder Morgan's Galena Park terminal on the Houston Ship Channel. With an initial capacity of 50,000 BPD, the facility is scheduled for a first quarter 2014 start-up, and has the potential to reach 100,000 BPD.

In recent years, production from the south Texas Eagle Ford region has reached a new high, resulting in the overall jump in U.S. oil production. Technological development and high prices encouraged the major energy companies to concentrate on unconventional plays.

Kinder Morgan's planned investments for the Eagle Ford Shale region have now reached more than $800 million, including joint ventures and other projects. Eagle Ford production touched 520,000 BPD in April, almost double the 270,000 BPD output in June of 2011, as per the estimates from energy consultancy firm, Bentek.

Houston-based Kinder Morgan Energy Partners L.P is the largest independent owner and operator of petroleum product pipelines in the U.S. With an enterprise value of more than $90 billion, the partnership is the fourth largest energy company in North America based on enterprise value. We expect Kinder Morgan to seize attractive investment opportunities in the near term, in particular the Eagle Ford and Haynesville shale plays.

We maintain our long-term Neutral recommendation for Kinder Morgan considering the uncertain macro environment, low demand for refined products and acquisition and execution risks. The partnership holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months.

Kinder Morgan faces competition from Enbridge Energy Partners, L.P. (EEP) and Enterprise Products Partners, L.P. (EPD).

 
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