Connecting Dots: WB, BRK, BNI, NGL, AZ, CA

I'm getting closer and closer to wrapping up the Bakken blog and moving to a new subject: Berkshire Hathaway portfolio. Truthfully, I doubt I could ever give up the Bakken blog but the trivia one could find about Warren Buffett's mutual fund appears to be unlimited.

Today, of all places, there are dots to connect between the RBN Energy link and Warren Buffett. But perhaps when you own a railroad the size of BNSF (Burlington Northern Santa Fe) it's easy to find Warren touches almost everything west of the Mississippi.

From RBN Energy today:  the huge NGL underground storage facilities serving California.

Because out in the Arizona desert there are these two old and fairly unknown underground salt facilities for storing NGLs - Bumstead Storage near Phoenix, AZ, and Adamana Storage in Holbrook, AZ. They have been around for a long time. 

Interestingly they now find themselves located right between the West Coast NGL market and a lot of the new shale plays in Permian and the Rockies. 

Think about that for a minute. 

Together these two facilities provide about 6 million barrels of NGL (LPG) storage capacity.  That may not sound like much in the context of Mont Belvieu, but it is huge in the West Coast market.  Could it be that they are in a really good spot with what is going on in the new world of shale gas derived NGLs?

Check out the map [at the linked site].  Holbrook is on BNSF, only about 500 short railroad miles away from the Permian Basin.  Bumstead fortunately has connections with both BNSF and Union Pacific (UP), making it an ideal way station between the two rail systems.

It would be a stretch to think that Warren and his team were even aware of these two remote, "old, and fairly unknown" (and relatively small) NGL storage facilities when they bought BNI, and if they did, the information did not factor into the decision to buy or not buy.

Coincidentally, and only slightly related, Independent Stock Analysis, had an interesting piece on natural gas as an investment today. The ISA thesis, if I understand it correctly, there has always been a time lag between natural gas prices and shifts in oil and gas production. The bottoming out of natural gas prices will eventually turn to the upside (and when it does, it will be quite dramatic, I suppose).