Thu, Jun. 11, 6:25 PM
- MLPs and other yield-oriented securities have been hit in recent weeks by rising interest rates, but Rob Thummel, portfolio manager at energy investment firm Tortoise Capital Advisors, thinks the downturn may provide an opportunity to buy some of the strongest companies at a lower price.
- Thummel says there is still a lot of need for improved energy infrastructure, and his favorite MLPs are Plains All American Pipeline (NYSE:PAA), Enterprise Products Partners (NYSE:EPD) and Magellan Midstream Partners (NYSE:MMP) for their strong management, current yields of 4%-6%, and backlogs of new projects.
- Thummel says despite the recent oil spill, PAA has a history of operating its assets safely and spill costs should not be material to its finances; earlier today, PAA filed an 8-K that estimates clean-up costs through June 9 at $65M, or $3M/day.
- Earlier: Plains All American is defended by some portfolio managers, analysts
Wed, Jun. 10, 7:28 PM
- The cost of cleaning up the oil spill near Santa Barbara, Calif., last month has reached $62M so far, according to Plains All American Pipeline (NYSE:PAA), operator of the onshore pipeline that ruptured and leaked ~100K gallons of crude.
- PAA's on-scene coordinator says costs are running at $3M/day and there is no timetable for when the cleanup will be complete, but that "the responsibility here is to get [the spill] cleaned up as quickly as possible."
- About 76% of 97 miles of coastline, mostly sandy beaches, have been cleared of oil.
Tue, Jun. 9, 9:49 PM
- A local official in Santa Barbara, Calif., has rejected an emergency request by Exxon Mobil (NYSE:XOM) to use large trucks to haul its crude oil until the pipeline that recently ruptured and caused a spill is fixed, saying there is not enough evidence that a defined emergency exists.
- XOM was using the pipeline owned by Plains All American Pipeline (NYSE:PAA) to haul 30K bbl/day of crude oil, and is now being forced to cut production at offshore California fields as its storage facilities fill up.
- In XOM's request for an emergency permit, it said it needed to maintain crude oil supply for California refineries so it could also maintain natural gas supplies to local utilities.
- Environmentalist groups had urged Santa Barbara to reject the request, saying it might lead to another oil spill.
Tue, Jun. 9, 11:59 AM
- Western Canadian producers of natural gas liquids will actively seek export opportunities in Asia, as output is projected to increase ~23% by 2020 and domestic demand from Alberta's oil sands sector slows down, industry officials said yesterday at the CERI 2015 Petrochemical Conference in Alberta.
- Current NGL output in the Western Canadian Sedimentary Basin is estimated at 650K bbl/day but that will grow by nearly 150K in the coming five years, with the potential to rise by another 370K and reach 1.17M bbl/day a decade later.
- With Alberta's oils sands producers putting on the backburner since January ~1.2M bbl/day of new capacity additions targeted by 2017-18, domestic demand will not show growth, leaving NGL companies with little option but to seek export markets.
- Atco Energy and Pembina (NYSE:PBA) have crossed the border and signed agreements to invest at Portland and Ferndale facilities on the U.S. west coast for exports; storage and fractionation facilities are planned by other western Canadian players such as Atco, Keyera (OTC:KEYUF), Plains Midstream (NYSE:PAA) and PBA.
Mon, Jun. 8, 5:55 PM
- Plains All American Pipeline (NYSE:PAA) fell 1.3%, capping a 8.5% drop since the May 19 oil spill near Santa Barbara caused by a leak in one of its pipelines, but Barron's Amey Stone reports some positive analyst commentary today.
- A decline in the price of crude and general seasonal weakness in large-cap MLPs contributed to today’s decline, says Infracap MLP portfolio manager Jay Hatfield, but he also says investors generally have overreacted to the spill, and that the pipeline is not core to PAA's operations.
- Tortoise Energy Infrastructure portfolio manager Rob Thummel lists PAA among his firm’s top holdings, partly because of its backlog of new projects, its 6% yield and growing dividend; he says insurance will cover much of the cost of the spill and clean up.
- Wunderlich's Jeff Birnbaum says PAA's record "on a relative basis is better than reported, and a majority of incidents have been minor," but that the spill could affect the company's long-term ability to grow its business in highly-regulated California.
Mon, Jun. 8, 10:58 AM
- Plains All American Pipeline (PAA -1.3%), whose ruptured pipeline created the largest coastal oil spill in California in 25 years, had assured the government that a break in the line was “extremely unlikely" and state-of-the-art monitoring could quickly detect possible leaks and alert operators, documents show.
- "The pipeline and its operation are state-of-the-art,” according to the analysis submitted to the state. “Spills are still possible, though extremely unlikely."
- The cause of the break has not been determined, but preliminary information released by federal regulators suggests that corrosion was the culprit.
Thu, Jun. 4, 8:19 AM
- Last month's pipeline rupture that spilled ~101K gallons of crude oil near Santa Barbara, Calif., occurred along a badly corroded section that had worn away to 1/16th of an inch in thickness, according to preliminary findings released by U.S. regulators.
- The Pipeline and Hazardous Materials Safety Administration found that more than 80% of the metal pipe wall had worn away over time because of corrosion.
- The agency also said its findings conflicted with the results of inspections conducted at the break area for operator Plains All American Pipeline (NYSE:PAA) on May 5, two weeks before the rupture, which pinpointed a 45% loss of wall thickness and concluded the pipe was in far better condition.
- PAA says it has not set a timeline to restart the pipeline but does not expect to restart before June 30; it reaffirms its Q2 adjusted EBITDA forecast of $435M-$485M.
Tue, Jun. 2, 3:22 PM
- Exxon Mobil (XOM +0.1%) says it will ask Santa Barbara County, Calif., for permission to temporarily transport its crude oil in trucks after a pipeline it was using ruptured two weeks ago, spilling more than 100K gallons of oil off the coast.
- XOM says the pipeline, owned by Plains All American Pipeline (PAA +1.5%), pumped ~30K bbl/day of crude oil from its Las Flores Canyon facility to a pumping station in Gaviota, where the crude then continued on to refineries inland.
- PAA says the pipeline has been out of service since the spill and that no timeline for restarting the pipeline has been set as federal regulators investigate the cause of the spill.
Thu, May 28, 9:45 PM
- Plains All American Pipeline (NYSE:PAA) braces for intensified scrutiny over the "insufficient" response to the recent oil spill off the California coast, as U.S. Sens. Boxer and Feinstein question why the ruptured pipeline lacked an automatic shut-off valve and whether some workers were left on the sidelines while the leak spread.
- Among the concerns: According to disclosures so far, it took PAA 90 minutes after the spill was confirmed to notify the National Response Center, which coordinates responses to hazardous material releases.
- "The response was extremely tardy that allowed oil to get in the water," says Environmental Defense Center chief counsel Linda Krop.
- Also today, the ruptured section of pipeline was removed for analysis to determine what caused it to fail, and cleanup continued with nearly 1,000 people and 16 boats involved in the effort.
- PAA has been involved in a number of previous infractions in California, including a pipeline that spilled an ~10K gallons of oil near Los Angeles a year ago.
Thu, May 28, 11:34 AM
- The federal government orders Plains All American Pipeline (PAA -0.7%) to continue its efforts to clean up the pipeline breach that dumped crude oil onto a pristine stretch of California coastline and into the Pacific Ocean.
- The order from the EPA and the Coast Guard also requires PAA to submit a written plan by June 6 that will outline measures for analyzing the spill's effects on the environment.
- Representatives from the two agencies say such an order is common in oil spills and is not in response to any inaction by PAA.
- Also, a conservation group is urging California regulators to reject a proposed expansion of the only offshore drilling operation still permitted in state waters along the Santa Barbara coastline.
Tue, May 26, 9:35 PM
- Plains All American Pipeline (NYSE:PAA) has revised downward the amount of oil believed spilled from the ruptured pipeline off the coast of Santa Barbara, Calif., now estimating that the maximum amount spilled is 101K gallons, or 4,200 gallons lower than previous estimates.
- PAA is still attempting to dig down to the pipe and look at the ruptured area, a crucial step toward determining the cause of the break, but it has been a slow process because workers cannot use heavy equipment on the soil above the broken pipe; PAA says it has “identified four locations on Line 901 that we plan to investigate as part of our customary procedures.”
- However, at least one analyst - Wunderlich's Jeff Birnbaum - believes the spill is not a "thesis changer" for PAA or Plains GP Holdings (NYSE:PAGP) despite the potential for one-time fines and clean-up expenses.
Fri, May 22, 3:26 PM
- Plains All American Pipeline (PAA +0.1%) is ordered by U.S. regulators to conduct a battery of tests and analyses before it can restart the pipeline that spilled thousands of gallons of oil across the California coastline near Santa Barbara.
- The order from the U.S. Transportation Department’s Pipeline and Hazardous Materials Safety Administration requires PAA to remove the damaged section of pipe, test it, empty the remainder of the line, and test the entire line for any conditions similar to the cause of the rupture; no fine was issued in the order.
- Bad weather reportedly has slowed cleanup efforts today at the spill site after several days of calm seas had helped crews earlier in the week.
Thu, May 21, 11:23 AM
- Cleanup teams continue to work around the clock to remove patches of crude oil that stained a beach and fouled Pacific waters near the Santa Barbara, Calif., coastline from a pipeline rupture that could become the biggest oil spill to hit the area since 1969.
- Tuesday's spill could be as large as 2,500 barrels (105K gallons), 5x more than the original estimate, in a worst-case scenario outlined by pipeline owner Plains All American Pipeline (PAA -3.2%), which also estimates 500 barrels may have reached the ocean.
- PAA says it is investigating if pump malfunctions along the line, which led to the line’s temporary shutdown, may have played a role in the spill.
- The pipe that burst was built in 1991 and had been tested a few weeks ago, but the results had not yet come in, the company says.
- California Gov. Brown has declared a state of emergency in Santa Barbara County, a move that frees up additional state funding and resources to help in the cleanup.
Wed, May 20, 3:59 PM
- Plains All American Pipeline (PAA -1.4%), owner of the pipeline that broke and spewed oil into the Pacific Ocean yesterday, says it still does not know exactly how much oil was lost, but the pipeline was operating at maximum capacity of 2K bbl/hour, or 84K gallons.
- Initial estimates put the spill at 500 barrels, or ~21K gallons, but the Coast Guard says the figure likely will change after a flyover provides a better sense of its scope.
- Cleanup efforts are said to be proceeding smoothly, aided by light winds and gentle waves; the oil slick now stretch an estimated nine miles.
- California’s attorney general's office is working with the Santa Barbara County district attorney to investigate whether any civil or criminal laws may have been violated.
Tue, May 19, 11:37 PM
- Oil from a ruptured pipeline near Santa Barbara, Calif., leaked into the Pacific Ocean earlier today, spreading into a four-mile-long slick and fouling an area beach.
- The cause and exact amount of the spill are unknown, but it could reach more than 500 barrels (~21K gallons), according to the Governor’s Office of Emergency Services.
- The pipeline, owned by Plains All American Pipeline (NYSE:PAA), has been shut off.
- The slick is said to be heading toward Refugio State Beach, a cove teeming with wildlife ~140 miles northwest of Los Angeles.
- Four oil spills of 100 barrels or more from PAA pipelines have occurred in California since 2010, not including the latest leak.
Tue, May 19, 6:44 PM
- Enterprise Products Partners (NYSE:EPD) and Plains All American Pipeline (NYSE:PAA) earn Buy ratings from Wunderlich's Jeffrey Birnbaum.
- The analyst likes EPD's almost unrivaled array of strategic assets spanning natural gas, natural gas liquids, crude oil and petrochemicals, and a long list of announced capex projects under construction, with additional projects in the works; he sees EPD as well positioned with a low cost of capital, strong balance sheet, excellent cash flow generation, and access to domestic supplies and both North American and offshore end market demand.
- Sentiment on PAA seems to have soured a bit following Q1 results, but Birnbaum thinks throughput and profit in the fee-based transportation and facilites segments could beat estimates if oil remains at ~$60, and company guidance on supply and logistics margins could prove conservative; the analyst sees PAA's inventory of fee-based assets set to come online and deliver improved coverage in 2016.
- Birnbaum adds that he thinks it's too early for PAA to merge into its general partner, Plains GP Holdings (NYSE:PAGP); since investors appear to have priced into PAGP an acquisition at PAA, he views PAGP as fairly valued and downgrades the stock to Hold from Buy with a $31 price target.
PAA vs. ETF Alternatives
Plains All American Pipeline LP is engaged in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the processing, transportation, fractionation, storage and marketing of natural gas liquids.
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