Because so many upstream producers have been refocusing on oil production as a result of depressed natural gas prices, it came as no surprise when Magellan Midstream Partners, L.P. (NYSE:MMP)’ Chairman, President, and CEO, Mike Mears, highlighted that the majority of its capital expenditures would focus on expanding its crude oil infrastructure. However, this doesn’t take away from its focus on the core of its business, which involves refined products transportation and terminalling.
While we see potential expansion opportunities in all of our business segments, crude oil pipeline and storage prospects still make up the vast majority of our potential organic project list, with about 80% of the current list of potential growth opportunities related to crude oil…because we do talk a lot about crude oil, because it is where a lot of our growth is. But it doesn’t change the fact that we are still primarily a refined products transportation terminalling company. And we are still interested in growing that business where the opportunities are appropriate.
Lastly, I turned to a uniquely positioned company in this space in Buckeye Partners, L.P. (NYSE:BPL) , due to its international terminals in the Bahamas and Puerto Rico. Because of these access points, President and CEO Clark Smith believes the company will be able to capitalize on the growth in South American crude oil production. The company is also looking forward to the finalized expansion of the Panama Canal, which will allow ships with larger berths to cross, and hopefully utilize these terminals as crude holding and transfer facilities
We continue to see interest from major producers with interest at offshore South American crude production for logistics solutions that could require further expansion at the BORCO facility. All of this success is due to BORCO’s advanced marine infrastructure and service capabilities which give us a competitive advantage over other marine terminals in the region.
With seemingly positive attitudes from all of these companies and their CEOs, it appears that the run of expansion and success that has been enjoyed might not be over just yet. One thing investors should be wary of, however, is companies that are breaching critical mass in certain geographies that would lead to diminishing returns based on excess available capacity. As of now, no regions appear to be in danger of that, especially the Bakken and Utica shales, which, by all accounts, are severely lacking in this respect.
The article 5 MLP CEOs Speak About Their 2013 Outlooks originally appeared on Fool.com.
Taylor Muckerman has no position in any stocks mentioned. The Motley Fool recommends Magellan Midstream Partners, L.P..
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