The place that oil and natural gas is normally found is usually not where it is needed or consumed so the problem has always been how it gets to the consumer. There are obviously numerous options but each option has a cost associated with it. The cheapest way to transport gases and liquids is through a pipe. The next cheapest way is by train. And the most expensive is by truck. Each has it's unique advantages and disadvantages but the most restrictive element for each of these is the transport network.
Generally pipelines are constructed and enlarged based upon oil and natural gas field discoveries. They're generally expensive to construct and cheap to operate but they also take years to build. Most are built and leased to companies with long term commitments that have built in annual increases in "toll" payments. Fortunately for pipeline companies, the lease payments are not dependent upon the value of the commodity that is passing through the pipeline so the value of the pipeline companies doesn't vary with the price of the transported commodity but rather with the volume of the commodity passing through the pipe.
There are fifty companies listed in the oil and gas pipeline industry that are both located in the United States and pay at least a minimal dividend. This is too many companies to be included in one article so I will look at them in a series of articles that I'll lay out over the next few days and weeks. Below are the ten largest pipeline companies by market capitalization. At the bottom of this page I will include hot links for follow on articles.
There are fifty companies listed in the oil and gas pipeline industry that are both located in the United States and pay at least a minimal dividend. This is too many companies to be included in one article so I will look at them in a series of articles that I'll lay out over the next few days and weeks. Below are the ten largest pipeline companies by market capitalization. At the bottom of this page I will include hot links for follow on articles.
Data as of 7 December 2014
1. Kinder Morgan, Inc. (KMI) operates as a midstream and energy company in North America. It operates through Natural Gas Pipelines, CO2KMP, Products PipelinesKMP, TerminalsKMP, Kinder Morgan CanadaKMP, and Other segments. The company owns an interest in or operates approximately 80,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, carbon dioxide (CO2), and other products; and terminals store petroleum products and chemicals, and handle products, such as ethanol, coal, petroleum coke, and steel. The company was formerly known as Kinder Morgan Holdco LLC and changed its name to Kinder Morgan, Inc. in February 2011. Kinder Morgan, Inc. is headquartered in Houston, Texas. (Daily Chart) (Weekly Chart)
| Price $41.12 1yr Target $44.38 Analysts 13 1yr Cap Gain 7.92% Dividend $1.76 Yield 4.28% 1yr Est Tot Return 12.20% | Market Cap $42.28 Bil Beta 0.68 EPS (ttm) $1.20 Payout Ratio 146.66% EPS next yr $1.52 P/E 34.27 PEG 3.81 Forward P/E 27.05 | Debt/Equity 3.02 ROA 1.60% ROE 9.60% ROI 6.60% Sales $16.15 Bil Income $1.23 Bil Profit Margin 7.61% |
2. The Williams Companies, Inc. (WMB) operates as an energy infrastructure company. The company's Williams Partners segment owns and operates natural gas pipeline system extending from Texas, Louisiana, Mississippi, and the offshore Gulf of Mexico through Alabama, Georgia, South Carolina, North Carolina, Virginia, Maryland, Delaware, Pennsylvania, and New Jersey to the New York City metropolitan area. This segment also owns and operates a natural gas pipeline system extending from the San Juan basin in northwestern New Mexico and southwestern Colorado through Colorado, Utah, Wyoming, Idaho, Oregon, and Washington to a point on the Canadian border near Sumas, Washington; gulfstream natural gas pipeline system extending from the Mobile Bay area in Alabama to markets in Florida; and constitution pipeline that connects its gathering system in Susquehanna County, Pennsylvania to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems. In addition, this segment gathers, treats, and processes natural gas; produces, fractionates, stores, markets, and transports natural gas liquids (NGL); and offers deepwater production handling and crude oil transportation services, as well as transports and stores natural gas to local natural gas distribution companies, municipal utilities, direct industrial users, electric power generators, and natural gas marketers and producers. Its Williams NGL & Petchem Services segment extracts, fractionates, treats, stores, and sells propane, propylene, normal butane, isobutane/butylene, and condensate to users in energy and petrochemical industries. The company's Access Midstream Partners segment offers gathering, treating, and compression services to other producers. As of August 26, 2014, it owned interests in or operates 15,000 miles of natural gas pipelines; 1,800 miles of NGL transportation pipelines; and approximately 10,000 miles of oil and gas gathering pipelines. The company was founded in 1908 and is headquartered in Tulsa, Oklahoma. (Daily Chart) (Weekly Chart)
| Price $50.04 1yr Target $64.57 Analysts 14 1yr Cap Gain 29.03% Dividend $2.28 Yield 4.55% 1yr Est Tot Return 33.58% | Market Cap $37.40 Bil Beta 1.31 EPS (ttm) $2.56 Payout Ratio 89.06% EPS next yr $1.45 P/E 19.55 PEG 3.16 Forward P/E 34.63 | Debt/Equity 2.29 ROA 5.40% ROE 28.80% ROI 5.90% Sales $7.16 Bil Income $1.90 Bil Profit Margin 26.53% |
3. Energy Transfer Equity, L.P. (ETE), through its subsidiaries, provides diversified energy-related services in the Unites States. The company sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users, and other marketing companies. It owns and operates approximately 7,800 miles of natural gas transportation pipelines and 3 natural gas storage facilities located in the state of Texas; and approximately 12,800 miles of interstate natural gas pipeline. The company's midstream operations owns and operates approximately 6,700 miles of in service natural gas and natural gas liquid (NGL) gathering pipelines, 5 natural gas processing plants, 15 natural gas treating facilities, and 3 natural gas conditioning facilities. Its NGL transportation and services operations include 70% interest in the Lone Star joint venture that owns approximately 2,000 miles of NGL pipelines, 3 processing plants, 2 fractionation facilities, and NGL storage facilities with storage capacity of approximately 47 million barrels; and a 50% interest in the Liberty pipeline, an approximately 87-mile NGL pipeline. The company also sells gasoline and middle distillates at retail; operates convenience stores in 24 states; and gathers, purchases, stores, transports, markets, and sells crude oil and refined products. In addition, it provides natural gas compression services for customer specific systems; and treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, and dehydration. Energy Transfer Equity, L.P. was founded in 2002 and is based in Dallas, Texas. (Daily Chart) (Weekly Chart)
| Price $57.13 1yr Target $78.00 Analysts 9 1yr Cap Gain 36.53% Dividend $1.66 Yield 2.90% 1yr Est Tot Return 39.43% | Market Cap $30.78 Bil Beta 0.92 EPS (ttm) $0.54 Payout Ratio 307.40% EPS next yr $1.97 P/E 105.80 PEG 3.61 Forward P/E 29.07 | Debt/Equity 42.11 ROA 0.60% ROE 38.00% ROI 5.30% Sales $54.82 Bil Income $292.00 Mil Profit Margin 0.53% |
4. Spectra Energy Corp. (SE), through its subsidiaries, owns and operates a portfolio of natural gas-related energy assets in North America. The company's Spectra Energy Partners segment is engaged in the transmission, storage, and gathering of natural gas, as well as transportation and storage of crude oil and natural gas liquids (NGLs) for customers in various regions of the midwestern, northeastern, and southeastern United States and Canada. Its natural gas pipeline systems consist of approximately 21,000 miles of transmission pipelines; and storage capacity comprises 305 billion cubic feet (Bcf). Its Distribution segment offers natural gas storage, transmission, and distribution services for residential, commercial, and industrial customers in Canada. This segment has approximately 39,000 miles of main and service pipelines; storage capacity of approximately 160 Bcf; and transmission system of approximately 3,000 miles of high-pressure pipeline and mainline compressor stations. The company's Western Canada Transmission & Processing segment provides natural gas transmission, and gas gathering and processing services; and services to natural gas producers to remove impurities from the raw gas stream, including water, carbon dioxide, hydrogen sulfide, and other substances. It also extracts, fractionates, transports, stores, and markets NGLs for western Canadian producers and NGL customers. This segment serves local distribution companies, end-use industrial and commercial customers, marketers, and exploration and production companies. Its Field Services segment gathers, compresses, treats, processes, transports, stores, and sells natural gas; produces, fractionates, transports, stores, sells, markets, and trades in NGLs; and recovers and sells condensate. This segment owns or operates approximately 67,000 miles of gathering and transmission pipelines. The company is headquartered in Houston, Texas. (Daily Chart) (Weekly Chart)
| Price $37.13 1yr Target $41.58 Analysts 12 1yr Cap Gain 11.98% Dividend $1.48 Yield 3.98% 1yr Est Tot Return 15.96% | Market Cap $24.91 Bil Beta 0.87 EPS (ttm) $1.49 Payout Ratio 99.32% EPS next yr $1.59 P/E 24.92 PEG 4.98 Forward P/E 23.38 | Debt/Equity 1.76 ROA 3.00% ROE 11.80% ROI 5.40% Sales $5.87 Bil Income $1.00 Bil Profit Margin 17.03% |
5. Energy Transfer Partners, L.P. (ETP) is engaged in the natural gas midstream, and intrastate transportation and storage businesses in the United States. The company's Midstream segment gathers, compresses, treats, blends, processes, and markets natural gas in various basins and shales in Texas, New Mexico, West Virginia, and Louisiana. This segment owns and operates approximately 6,700 miles of natural gas gathering pipelines. Its Intrastate Transportation and Storage segment transports natural gas from various natural gas producing areas, as well as through its ET fuel system and HPL system. This segment has approximately 7,800 miles of natural gas transportation pipelines and 3 natural gas storage facilities in Texas. The company's Interstate Transportation and Storage segment provides natural gas transportation and storage services; owns and operates approximately 12,800 miles of interstate natural gas pipeline; and has interests various natural gas pipelines. The company's Natural Gas Liquid (NGL) Transportation and Services segment transports mixed NGLs and other hydrocarbons; stores mixed NGLs, NGL products, and petrochemical products; and separates mixed NGL streams into purity products. This segment owns and operates various NGL pipelines, as well as NGL storage facilities with aggregate storage capacity of approximately 47 million barrels. Its Investment in Sunoco Logistics segment gathers, purchases, markets, and sells crude oil primarily in the mid-continent United States; and owns and operates approximately 2,500 miles of refined products pipelines in the United States. The company's Retail Marketing segment sells gasoline and middle distillates at retail; and operates convenience stores. Energy Transfer Partners, L.P. was founded in 2002 and is based in Dallas, Texas. (Daily Chart) (Weekly Chart)
| Price $64.52 1yr Target $73.92 Analysts 12 1yr Cap Gain 14.56% Dividend $3.90 Yield 6.04% 1yr Est Tot Return 20.60% | Market Cap $22.76 Bil Beta 0.88 EPS (ttm) $0.14 Payout Ratio 2,785.71% EPS next yr $3.26 P/E 460.86 PEG 17.07 Forward P/E 19.80 | Debt/Equity 1.56 ROA 0.10% ROE 0.60% ROI 5.40% Sales $50.91 Bil Income $8.00 Mil Profit Margin 0.01% |
6. Plains All American Pipeline, L.P. (PAA), together with its subsidiaries, is engaged in transporting, storing, terminating and marketing crude oil, natural gas liquids (NGL), natural gas, and refined products in the United States and Canada. The company operates in three segments: Transportation, Facilities, and Supply and Logistics. The Transportation segment transports crude oil and NGL through pipelines, gathering systems, trucks, and barges. As of December 31, 2013, this segment owned and leased 16,900 miles of active crude oil, and NGL and gathering systems; 24 million barrels of active and above-ground tank capacity; 744 trailers; and 130 transport and storage barges, as well as 62 transport tugs. The Facilities segment provides storage, terminalling, and throughput services for crude oil, refined products, and NGL and natural gas; and NGL fractionation and isomerization, and natural gas and condensate processing services. As of December 31, 2013, this segment owned and operated approximately 74 million barrels of crude oil and refined products storage capacity; 23 million barrels of NGL storage capacity; 97 billion cubic feet of natural gas storage working capacity; 17 billion cubic feet of base gas; 11 natural gas processing plants; 1 condensate stabilization facility; 7 fractionation plants; 24 crude oil and NGL rail terminals; and 1,250 miles of active pipelines. The Supply and Logistics segment purchases crude oil at the wellhead, pipeline, and terminal and rail facilities; cargos at their load port and various other locations in transit; NGL from producers, refiners, processors, and other marketers. This segment also stores inventory and NGL; resells or exchanges crude oil and NGL; and transports crude oil and NGL on trucks, barges, railcars, pipelines, and ocean-going vessels. As of December 31, 2013, this segment owned 843 trucks and 982 trailers, and 7,400 crude oil and NGL railcars. The company was founded in 1998 and is headquartered in Houston, Texas. (Daily Chart) (Weekly Chart)
| Price $50.42 1yr Target $63.71 Analysts 21 1yr Cap Gain 26.35% Dividend $2.64 Yield 5.23% 1yr Est Tot Return 31.58% | Market Cap $18.76 Bil Beta 0.55 EPS (ttm) $2.27 Payout Ratio 116.29% EPS next yr $2.66 P/E 22.21 PEG 15.87 Forward P/E 18.97 | Debt/Equity 1.11 ROA 5.20% ROE 14.50% ROI 10.70% Sales $44.64 Bil Income $826.00 Mil Profit Margin 1.85% |
7. Magellan Midstream Partners, L.P. (MMP) is engaged in the transportation, storage, and distribution of refined petroleum products and crude oil in the United States. It operates in three segments: Refined Products, Crude Oil, and Marine Storage. The company operates refined products pipeline that transports gasoline, distillates, aviation fuels, and liquefied petroleum gases for independent and integrated oil companies, wholesalers, retailers, railroads, airlines, and regional farm cooperatives; and provides ancillary services, including ethanol and biodiesel loading and unloading, additive injection, custom blending, terminalling, laboratory testing, and data services. It also owns and operates crude oil pipelines and storage facilities; and marine terminals located along coastal waterways that provide distribution, storage, blending, inventory management, and additive injection services for refiners and other end-users of petroleum products. As of December 31, 2013, the company had interest 9,500-mile refined products pipeline system with 53 terminals, 27 independent terminals not connected to its pipeline system, and 1,100-mile ammonia pipeline system that transports and distributes ammonia from Texas and Oklahoma to various distribution points; approximately 1,100 miles of crude oil pipelines and storage facilities with an aggregate storage capacity of approximately 18 million barrels; and marine terminals with an aggregate storage capacity of approximately 27 million barrels. Magellan GP, LLC serves as the general partner of Magellan Midstream Partners, L.P. The company was founded in 2000 and is headquartered in Tulsa, Oklahoma. (Daily Chart) (Weekly Chart)
| Price $80.92 1yr Target $90.42 Analysts 13 1yr Cap Gain 11.73% Dividend $2.67 Yield 3.29% 1yr Est Tot Return 15.02% | Market Cap $18.37 Bil Beta 0.52 EPS (ttm) $3.42 Payout Ratio 78.07% EPS next yr $3.58 P/E 23.66 PEG 1.53 Forward P/E 22.60 | Debt/Equity 1.65 ROA 15.20% ROE 44.60% ROI 16.20% Sales $2.21 Bil Income $777.40 Mil Profit Margin 35.15% |
8. Spectra Energy Partners, LP (SEP) operates as an investment arm of Spectra Energy Corp. Spectra Energy Partners, LP, through its subsidiaries, engages in the transportation of natural gas through interstate pipeline systems, and the storage of natural gas in underground facilities in the United States. As of December 31, 2007, it owned and operated 100% of the approximately 1,400-mile East Tennessee interstate natural gas transportation system that extends from central Tennessee eastward into southwest Virginia and northern North Carolina, and southward into northern Georgia; and a liquefied natural gas storage facility in Kingsport, Tennessee with working gas storage capacity of approximately 1.1 billion cubic feet (Bcf) and re-gasification capability of 150 million cubic feet per day. The company also owned a 24.5% interest in the approximate 700-mile Gulfstream interstate natural gas transportation system, which extends from Pascagoula, Mississippi, and Mobile, Alabama across the Gulf of Mexico and into Florida; a 50% interest in Market Hub, which owns and operates 2 salt cavern natural gas storage facilities, the Egan storage facility with gas capacity of approximately 20 Bcf, and the Moss Bluff storage facility with working gas capacity of 15 Bcf. The company transports and stores natural gas for local gas distribution companies, municipal utilities, interstate and intrastate pipelines, direct industrial users, electric power generators, marketers, and producers. Spectra Energy Partners (DE) GP, LP, operates as the general partner to Spectra Energy Partners, LP. The company is based in Houston, Texas. (Daily Chart) (Weekly Chart)
| Price $56.43 1yr Target $55.86 Analysts 14 1yr Cap Gain -1.02% Dividend $2.31 Yield 4.09% 1yr Est Tot Return 3.07% | Market Cap $16.67 Bil Beta 0.44 EPS (ttm) $5.76 Payout Ratio 40.10% EPS next yr $2.82 P/E 9.80 PEG N/A Forward P/E 19.98 | Debt/Equity 0.58 ROA 8.40% ROE 14.00% ROI 8.30% Sales $3.30 Bil Income $1.43 Bil Profit Margin 43.33% |
9. Plains GP Holdings, L.P. (PAGP), through its 22.1% limited partner interest in Plains AAP, L.P., is engaged in the transportation, storage, terminating and marketing of crude oil, refined products, natural gas liquids (NGL), and natural gas in the United States and Canada. The company operates through three segments: Transportation, Facilities, and Supply and Logistics. The Transportation segment is involved in transporting crude oil and NGL on pipelines, gathering systems, trucks, and barges. As of December 31, 2013, this segment had owned and leased assets comprising 16,900 miles of active crude oil and NGL pipelines and gathering systems; 24 million barrels of active, above-ground tank capacity; 744 trailers; and 130 transport and storage barges, as well as 62 transport tugs. The Facilities segment provides storage, terminalling, and throughput services for crude oil, refined products, NGL, and natural gas; NGL fractionation and isomerization services; and natural gas and condensate processing services. As of December 31, 2013, this segment owned and operated approximately 74 million barrels of crude oil and refined products storage capacity; 23 million barrels of NGL storage capacity; 97 billion cubic feet of natural gas storage working capacity; 17 billion cubic feet of base gas; 11 natural gas processing plants; 1 condensate stabilization facility; 7 fractionation plants; 24 crude oil and NGL rail terminals; and 1,250 miles of active pipelines. The Supply and Logistics segment is involved in merchant-related activities, such as purchase of crude oil, cargos, NGL; storage of inventory and NGL; and resell or exchange, and transport of crude oil and NGL. As of December 31, 2013, it owned 12 million barrels of crude oil and NGL line fill; 843 trucks and 982 trailers; and 7,400 crude oil and NGL railcars. PAA GP Holdings LLC operates as a general partner of the company. Plains GP Holdings, L.P. was founded in 2013 and is based in Houston, Texas. (Daily Chart) (Weekly Chart)
| Price $26.39 1yr Target $32.65 Analysts 20 1yr Cap Gain 23.72% Dividend $0.76 Yield 2.87% 1yr Est Tot Return 26.59% | Market Cap $16.23 Bil Beta N/A EPS (ttm) $0.42 Payout Ratio 180.95% EPS next yr $0.63 P/E 62.83 PEG N/A Forward P/E 41.62 | Debt/Equity 8.79 ROA 0.30% ROE 5.50% ROI 17.30% Sales $44.64 Bil Income $57.00 Mil Profit Margin 0.12% |
10. Western Gas Equity Partners, LP (WGP) is engaged in gathering, processing, compressing, treating, and transporting natural gas, condensate, natural gas liquids, and crude oil in the United States. It owns assets located in East, West, and South Texas; the Rocky Mountains covering Colorado, Utah, and Wyoming; north-central Pennsylvania; and the Mid-Continent comprising Kansas and Oklahoma. The company is headquartered in The Woodlands, Texas. Western Gas Equity Partners, LP operates as a subsidiary of Western Gas Resources Inc. (Daily Chart) (Weekly Chart)
| Price $62.55 1yr Target $70.60 Analysts 10 1yr Cap Gain 12.86% Dividend $1.17 Yield 1.87% 1yr Est Tot Return 14.73% | Market Cap $13.69 Bil Beta N/A EPS (ttm) $0.98 Payout Ratio 119.38% EPS next yr $1.39 P/E 63.83 PEG 3.27 Forward P/E 44.94 | Debt/Equity 2.22 ROA 4.40% ROE 21.40% ROI 12.00% Sales $1.23 Bil Income $214.50 Mil Profit Margin 17.39% |
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