Friday, May 31, 2013

Kinder Morgan Cancels Plans For $2 Billion Freedom Pipeline, Permian To California

WSJ's take on this story.

Rigzone is reporting:
Kinder Morgan Energy Partners LP said Friday it has cancelled plans for the $2 billion Freedom pipeline, a conduit that would have brought a direct stream of West Texas crude to refiners on the U.S. West Coast.
The cancellation underscores the growing difficulty pipeline companies are having in selling new large-scale projects as oil producers and refiners increasingly rely on railroads to ship crude around. Once seen as temporary necessities to deliver oil from emerging oil-producing regions in Alberta, Texas and North Dakota, railcars have become a permanent fixture of the North American energy landscape because they allow refiners more diversity of supply.
This trend means that pipeline giants like Kinder Morgan will have to focus on smaller pipeline projects and branch out into other transportation segments.
I remember a couple years back, someone sending me a comment telling me that CBR was a temporary phenomenon. See also the WSJ story, May 24, 2013.
Kinder Morgan Energy Partners first pitched the 277,000 barrel-a-day pipeline in April, hoping to woo West Coast refiners dependent on more expensive oil shipped in from Russia, Ecuador and about a dozen other countries. Refiners in the fuel-hungry California market are eager to buy the same cheaper domestic crude that is already benefiting their competitors in the Midwest and Gulf Coast.
But Valero Energy Corp., Tesoro Corp. and others operating on the West Coast turned Kinder Morgan's proposal down, saying railcars gave them more flexibility. Bringing west Texas crude oil via Freedom and its $5-a-barrel tariff would not be much cheaper than shipping crude oil via rail from the Bakken oil field in North Dakota but would tie refiners down to long-term pipeline contracts.
I personally think it's a hoot -- CBR -- day in, day out, trains rolling down the track, burning fossil fuel and spewing CO2. Flexible, scalable, and manpower intensive. All those SUV's at RRX's, idling, waiting for the 110-car unit trains to pass. What's not to love.

And this is the irony: it's not even the activist environmentalists pushing their agenda any more; it's the big bad oil companies that have decided that "the track is back." 

For investors: check out Genesse & Wyoming. Another great opportunity. It's p/e is only 43.

Disclaimer: this is not an investment site. Do not make any decisions based on anything you read here or think you read here.  

Something tells me Jim Croce is smiling:

Railroad Son, Jim Croce

In his dreams, riding the rails to California; looks like it's no longer a dream. "The track is back." The song kinda reminds me of that other singer...John Denver.

Take Me Home, John Denver

To The Granddaughters

John Denver's "Take Me Home" used to bring tears. There are many, many songs I associate with one of the most remarkable summers of my life, and "Country Roads, Take Me Home" was one of the best.

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