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Inside Kinder Morgan Energy Partners LP (KMP) (KMI) Morgan: Terminals

A look ahead

Although the deal to run the Port of Wilmington isn’t working out, I like that Kinder Morgan is open to pursuing that sort of opportunity. In the meantime, there are plenty of deals going through.

We’ll start with Kinder Morgan’s recently announced plan to partner with Watco in a long-term agreement with Mercuria Energy Trading to build a 210,000-barrel-per day rail project on the Houston Ship Channel. The project will bring crude from Canada, the Bakken Shale, Cushing, Okla., and West Texas into Houston. According to Terminals President John Schlosser, it will be the first major crude-by-rail unloading facility in Houston. With all the news about oil on trains lately, it’s hard to see anything but upside with this deal. Phase 1 of the project should be operational by the third quarter of this year, with phase 2 slated to come online by the third quarter of 2014.

Another important boost to the terminals segment is expected to start up in the third quarter. That’s when commercial operations are slated to begin at the Battleground Oil Specialty Terminal on the Houston Ship Channel. Kinder Morgan Energy Partners LP (NYSE:KMP) has a 55% stake in BOSTCO, a 52-tank storage facility with a capacity of 6.5 million barrels. Nearly all of the facility’s capacity has already been contracted.

Moving north to the partnership’s Canadian terminals, Kinder Morgan expects to complete a terminal project in Alberta by December. Located in Edmonton, this facility has a capacity of 3.6 million barrels and is supported by long-term contracts. Additional capacity of 1.2 million barrels is expected to come online in 2014.

All told, between now and the end of 2014 Kinder Morgan will have about $1.43 billion in terminal projects coming online, with an additional $250 million to $550 million in projects under review.

Foolish takeaway

Kinder Morgan’s terminals business is an important part of its energy network. The diversification of revenue is always important, and that’s exactly what this segment gives the partnership. Now that we’ve broken down exactly what the segment looks like, we can better evaluate its progress in the coming months and years.

The article Inside Kinder Morgan: Terminals originally appeared on

Fool contributor Aimee Duffy has no position in any stocks mentioned. Click here to see her holdings and a short bio. If you have the energy, check out what she’s keeping an eye on by following her on Twitter, where she goes by @TMFDuffy. The Motley Fool recommends and owns shares of Kinder Morgan.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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