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Prior Updates Nov 05 Oct 05 Sept 05 August 05 July 05 June 05 May 05 April 05 Mar 05 Feb 05 Jan 05 Dec 04 Nov 04 Oct 04 Sept 04 August 04 July 04 June 04 May 04 Intro to MLPs MLP & Energy News Oil Online MLP Blog Petro News Utility/MLP Blog Yahoo News MLP's 101 MLP Primer Market Stats MLPs at Yahoo MLPs at MSN Factoids December November October September REIT Updates Dec News Dec Off/Ind/Apt Dec Retail/Hlth Bank Updates December November October September August |
What does a site that already has ten spreadsheets need? One more spreadsheet. This month I have added another, this one showing the monthly changes in price targets. And this may turn out to be very meaningful in explaining monthly price changes. KMP and TPP are good examples. There were no EPS changes to explain their drop, but a significant drop in their median price targets do explain their drop in price. In the past, I had not given much weight to this metric. But unless I track the metric, I do not know enough to say it should be ignored. And at first glance, changes in the metric look to have explanatory powers. As of 12-30, with the ten year treasury at 4.40% and the MLP sector yielding 6.92%, the spread of MLPs over the yield of the 10 year stands at 252 basis points. The sector's prioces fell 1.64% for the month and ended the year down 0.26% with an approximate total return of 6%. As stated in the footnotes of one of the spreadsheets below, higher yields in REITs tend to be predictive of lower total returns for stocks within each sector. Is that true for MLPs? At first glance, that is true. For the top four stocks that lead the sector in total return on 12-16 [CPNO, ETP, MMP and HEP], all started 2005 with yields below the sector average. [As of 12-29, KMP would displace HEP, making it three out of four sector leaders starting with below sector yields.] And of the four stocks that most lag the sector in total return [VLI, TCLP, EEP and NBP], three of the four had yields that were above the sector average. For November, the Pipeline MLP sector fell 5.22%. On 11-30 the sector was up 1.33% year to date and yiedling 6.79%. For the month of November, yields rose 16 basis points - with no MLPs increasing their distributions this month. The ten year treasury, which ended October at 4.57% [and September at 4.33%], ended November at 4.49% - a fall of 8 basis points. The spread of MLPs over the yield of the 10 year on 11-30 stood at 230 basis points after ending October at 188, September at 174, August at 208, July at 159, June at 211, May at 216, April at 195, March at 156, February at 152 and ending January at 178. For 2005 the average spread has been 186. Energy Transfer Announces Acquisition of Three Retail Propane Companies Busines Wire 12-07 Energy Transfer Partners announces that it has recently completed the acquisition of three retail propane businesses. These transactions were closed during the period from September 1, 2005 to December 6, 2005. The retail propane businesses acquired are located in the states of Wyoming, Missouri and Pennsylvania. In total, six new customer service centers were added, delivering approximately 10.0 million gallons annually. Energy Transfer Partners Declares Increase in Quarterly Distribution Busines Wire 12-05 Energy Transfer Partners announced an increase in the quarterly cash distribution paid on the Partnership's outstanding limited partner units to $0.55 per common unit (an annualized rate of $2.20 per common unit) for the quarter ended November 30, 2005. This latest increase represents an increase of $0.20 per common unit on an annualized basis. Energy Transfer Equity Increases Offering Size WSJ 12-20 Energy Transfer Equity (ETE), a limited partnership that owns equity interests in Energy Transfer Partners L.P. (ETP), boosted the size of its pending initial public offering Tuesday to 17.5 million common units from 15 million common units. In addition, the underwriters have an option to purchase up to 2.63 million additional common units to cover any overallotments, up from 2.25 million.The company said it will use about $177 million of net proceeds from the IPO to repay a portion of the debt outstanding under its existing $600 million term loan agreement. Energy Transfer Equity said it will also use the proceeds to fund its acquisition of an additional 3.64 million Energy Transfer Partners common units and for general partnership purposes. Holly May Sell Montana Refinery PRNewsWire 12-05 Holly Corporation today announced that it has signed an exclusivity agreement with Connacher Oil and Gas Limited for the possible sale of the 8,000 barrels-per- day ("bpd") refinery operated by Holly's Montana Refining Company in Great Falls, Montana. The exclusivity agreement, which was entered into after Connacher approached Holly concerning a possible sale of the refinery, is valid until the end of January 2006 unless it is extended by both companies. Enbridge Energy Completes $106 Million Sale of Midstream Natural Gas Assets PrimeZone 12-07 Enbridge Energy has closed its previously announced sale of midstream natural gas assets to subsidiaries of TexStar Field Services, L.P. for $106 million. EEP will use net proceeds from the sale to repay a portion of debt outstanding under its commercial paper program, which was used to provide interim financing for internal growth projects under construction. The principal assets included in the transaction were: (a) approximately 327 miles of gas gathering pipeline, 121 miles of transmission pipeline and a gas treating facility located in South Texas; and (b) approximately 300 miles of gathering and products pipeline, the Eustace gas processing and treating plant and three other gas treating facilities located in Northeast Texas. Kinder Morgan Announces 2006 Expectations PRNewsWire 12-13 Kinder Morgan announced it expects earnings of $5.00 per share in 2006. The 2006 outlook includes the impact of the recently acquired Terasen assets and is consistent with the expectations discussed when the Terasen transaction was announced. The outlook represents over 18% earnings per share growth above the 2005 budget of $4.22. The expectations include contributions from assets currently owned by Kinder Morgan and do not include any benefits from unidentified acquisitions. KMP expects to declare cash distributions of $3.28 per unit for 2006. [KMP currently pays $0.79/quarter or $3.16/yr] KMI expects to recommend to its board of directors in January that its dividend be increased to $3.50 per share annually from its current level of $3.00. Magellan Midstream Adds of System Terminals PRNewsWire 12-15 Magellan Midstream Partners announced that it has acquired two refined petroleum products terminals that are connected to its 8,500-mile petroleum products pipeline system. The terminals include 0.4 million barrels of combined usable storage capacity and are located in Wichita, Kansas and Aledo, Texas, which is near Ft. Worth. Both were acquired from privately-held companies. "The acquisition of these system terminals, which are connected to the pipeline assets we acquired in Oct. 2004, will provide more options for our customers and attract more barrels into our pipeline system," said Don Wellendorf, chief executive officer. Sunoco Logistics Signals Securities Sales BizJournals 12-22 Sunoco Logistics Partners LP has filed a shelf-registration statement covering up to $500 million of its common units and a subsidiary's debt securities. The statement, filed Wednesday with the Securities and Exchange Commission, also covers the resale of up to 5 million units owned by Sunoco Logistics Partners' general partner, Sunoco Partners LLC. Sunoco owns Sunoco Partners LLC, which owns about 48 percent of Sunoco Logistics Partners' units. That percentage will be reduced if Sunoco Partners sells the units registered in the offering. Copano Announces $50 Million Private Placement; Significantly Expands Hedging PRNewswire 12-30 Copano Energy announced today the private placement of $50 million of common units at a price of $35.25 per unit with three institutional investors including a fund managed by Zimmer Lucas Capital. Proceeds will be used to reduce outstanding indebtedness, including indebtedness recently incurred in connection with the expansion of Copano's commodity hedging program. During the week of December 19, Copano acquired a portfolio of natural gas and product-specific natural gas liquids puts and entered into swap agreements with respect to four natural gas liquid products. The expanded program, in combination with Copano's West Texas Intermediate (WTI) crude oil puts acquired in July 2005, was implemented as a cash flow hedge to protect the company from a substantial decline in commodity prices. CPNO purchased puts on natural gas through 2009 and purchased puts and entered into swaps for ethane, propane, iso-butane and normal butane through 2008. The company paid approximately $38 million for the newly-acquired puts and used cash on hand and borrowings under its revolving credit facility to pay for them. "These actions reflect Copano's commitment to maintain a flexible balance sheet and to reduce exposure to commodity price volatility," said John Eckel, Chairman and Chief Executive Officer of Copano Energy. "Although we are pleased to have acquired these hedge positions, we regard them as part of an ongoing risk management program." John Freeman, Raymond James 12-02 There has been an inverse relationship between capital raised and MLP returns. For the most part, returns have been highest in the months with the lowest deal volume. MLP equity offering per month: January - 0; February - $568 million; March - $309 million; April - 0; May - $907 million; June $429 million; July - 0; August - $1.070 billion; September - $800 million; October - $34 million; November $1.066 billion; December - 0. Midstream MLP prices have been driven more by crude and natural gas fluctuations instead of the 10-year Treasury during 2005.
During periods where operating risk has increased in the pipeline sector we would expect yield spreads to increase. Similarly, during periods when growth stocks and the broad market are performing well, we would expect yield spreads to widen as investors move into high growth names and away from low beta income investments. We continue to view the MLP sector as attractive taking into consideration its relatively high yields and moderate distribution growth, versus a broader market that looks to be stuck in a trading range. Pipeline MLPs should be trading at a fairly tight spread relative to the 10-Year U.S. Treasury. The yield spread between pipeline MLPs and the 10-Year U.S. Treasury is currently 233 bps, compared to its historical average of 215 bps. Michael Cumming, CFA and Analyst for Morningstar 12-12 Northern Borders and TC Pipelines have been beaten up since the spring after announcing that the pipeline they co-own was not pumping at full capacity due to recontracting problems and seasonal fluctuations in demand. Morningstar analyst Michael Cumming feels that the news is overblown and expects that both companies will be able to recoup lost profits through a future rate hike. Shares have also suffered as the Fed has raised interest rates, because both firms are structured as interest rate-sensitive master limited partnerships (MLP). We think so highly of TC Pipelines right now that two of our newsletters--Morningstar StockInvestor edited by Paul Larson and DividendInvestor edited by Josh Peters, CFA--own it in their model portfolios. Northern Borders Pipeline: Fair Value Estimate: $50 Consider Buy: $42.60 From the Analyst Report: A pure pipeline company focused on natural gas, Northern Border owns an attractive portfolio of stable assets that generate substantial free cash flow and are insulated from commodity price swings. The crown jewel is a 70% stake in its namesake Northern Border Pipeline. Stretching from the Canadian border of Montana to Chicago, this system transports 22% of the natural gas Canada exports to the United States. The company received Federal Energy Regulatory Commission approval last year to expand capacity on the last leg of this line by 15% to satisfy rising demand in the Chicago area, which will add to the pipeline's profitability. Northern Border Partners reported record earnings and free cash flow in 2004, aided by rising demand for energy in its markets. We like the partnership and would buy the units at the right price. The upshot is that Northern Border's operations generate substantial, predictable free cash flow. In 2004, Northern Border created $201.2 million in free cash flow, which equates to 34% of sales. This stable cash flow from regulated operations supports the company's large partnership distributions, which amount to a yield of 6.7% at the current unit price. TC Pipelines LP: Fair Value Estimate: $38 Consider Buy: $32.40 From the Analyst Report: As a holding company with exactly two investments, TC is easy to understand. Its larger investment, responsible for 86% of the firm's income last year, is its 30% stake in the Northern Border Pipeline system. Stretching 1,250 miles from the Canadian border of Montana to Chicago, this system is responsible for transporting roughly 22% of the natural gas that Canada exports to the United States. Northern Border Partners owns the other 70%. TC's other investment is its 49% stake in the Tuscarora pipeline in northern Nevada and California. It is a relatively short 240 miles and has a small throughput. Last year, it transported 24.7 billion cubic feet of gas, compared with the 845 bcf the Northern Border Pipeline carried. Tuscarora has experienced tremendous growth in throughput and profitability, with net income rising 25% over the past three years. TC's parent company and general partner, TransCanada TRP, owns 1% of Tuscarora, while utility Sierra Pacific Resources SRP owns the final 50%. TC's simple structure and steady assets give the firm a lower risk profile relative to the rest of our coverage universe, and these changes adjust for this. At the current distribution rate of $2.30 annually, the stock would yield 6.1% at our fair value estimate. Shortages of Tools, Housing and Labor Slow Repairs in Gulf Brad Foss, Associated Press 12-24 There is no shortage of work these days for Bay Ltd., which specializes in repairing offshore oil and gas platforms. The trouble is, the same hurricanes that slammed the Gulf's energy infrastructure and created this extra business also upended the company's southern Louisiana work force. "If we had more people, we could definitely get more work," said Mark Comeaux, manager of Bay's fabrication plant, south of New Orleans. Comeaux, who lost half of his 80-person crew after the hurricanes, said employees either moved away or they found better-paying blue-collar jobs once federal reconstruction funds began flowing to the region. Enough work, not enough workers - a common problem for companies supporting the Gulf's oil and gas industry. With demand outstripping supply for everything from inspection and repair crews to supply ships to power tools, the price for all of these things is going up. Also on the rise are wait times for some much-needed oil-field services and equipment as competing producers sign longer than usual contracts in order to avoid finding themselves at the back of the line. "There's so much work down here for diving it's unbelievable," said Jeff Sikut, president of Avondale, La.-based J&J Diving, an underwater pipeline inspection and repair company that is turning away two to three potential new customers a day. Sikut said he'd love to hire an additional 50 divers and take on additional work, but the available labor pool is extremely shallow and those who would consider relocating to southern Louisiana often cannot find reasonably priced housing. Sikut said projects have been slowed by the shortage of hydraulic and pneumatic tools - a byproduct of soaring construction demand throughout the Gulf Coast as well as a tight market for the jet pumps that are used to move sand in order to bury pipelines. Even when all the best crews and equipment are available, it is slow going. "There are boats sunk everywhere. Platforms were mangled, and the pipelines look like spaghetti," Sikut said. To be sure, oil and gas producers have made significant progress in restoring production in spite of these challenges. "The impression we're getting from our members is that it's going even better than expected," said Larry Wall, a spokesman for the Baton Rouge-based Louisiana Mid-Continent Oil and Gas Association. Still, about a quarter of the Gulf's daily oil output, and one-fifth of its natural gas output, remains offline and the pace of progress is expected to slow in the months ahead, a trend that could keep upward pressure on energy prices. The region's daily output of oil and natural gas is not anticipated to reach pre-hurricane levels until next summer. It could be at least two years before all of the damaged energy infrastructure in the Gulf of Mexico is fixed, those involved in the recovery effort say. Todd Hornbeck, chairman and founder of Hornbeck Offshore, believes that if current weather patterns persist and more oil and natural-gas drilling occurs in the Gulf, the industry may find itself in a "perpetual repair cycle." However, Hornbeck said the current labor crunch shouldn't come as a surprise. It is partly a reflection of the industry's history of boom and bust cycles, whereby employees laid off during periods of low energy prices move on to other skilled professions and do not return. About 110 of the Gulf's roughly 4,000 production platforms were destroyed by Katrina and Rita, and some may never be rebuilt, industry and government officials said. "There were a fair number of those platforms that were destroyed that were very low producers, so if they do not come online, it doesn't mean we cannot get back to a pre-hurricane level," said Gary Strasburg, a spokesman at the Minerals Management Service. Yet even the platforms that are eventually rebuilt will not all be in place by the middle of next year. Instead, in order to get back to pre-hurricane levels, the industry is relying on the addition of one major platform that was under construction prior to Katrina and Rita — BP's Thunder Horse. Once up-and-running in the second half of 2006, Thunder Horse will have the capacity to produce as much as 250,000 barrels per day of oil and 200 million cubic feet a day of natural gas. It is equivalent to more than half of the region's daily oil production still off line, and almost 10% of the daily natural-gas production off line. Energy Companies Swarm Rockies, Drilling in Neglected Fields David Ivanovich, Houston Chronicle 12-10 Oil and gas producers are stampeding to the Rockies. With natural gas prices hitting all-time highs and Gulf of Mexico production still recovering from a hurricane-plagued year, energy companies are drilling up long-neglected fields. The Rockies are thought to hold enough gas to heat and cool 70 million homes for nearly half a century, the National Petroleum Council estimates. But those resources are usually found in hard-to-produce deposits. The lure for energy companies is an estimated 284 trillion cubic feet of gas that could be produced in the Rockies using current technology, according to the National Petroleum Council, an industry advisory group for the federal government. The Rocky Mountain region "is literally the Middle East to natural gas," declared Fred Barrett, president of Denver-based producer Bill Barrett Corp., one of the largest operators in the region. And unlike, say, the Gulf Coast, this area is a relatively undeveloped oil- and gas-producing region, with 80% to 85% of the resources still in the ground, Barrett said. With numerous forecasters predicting natural gas prices will remain aloft for the foreseeable future, energy companies are spending billions of dollars to drill in an area largely overlooked since the oil and gas bust of the mid-1980s. BP showed how much it believed in the area's potential when it announced plans in October to spend approximately $2.2 billion in the next 15 years to drill 2,000 wells in Wyoming's Wamsutter Field. Because the federal government controls so much of the land in this part of the country, oil and gas producers have flooded the Bureau of Land Management with applications for permits to drill. In fiscal 2004, the bureau approved 5,747 drilling applications to drill on public lands in Wyoming, Colorado, New Mexico, Utah and Montana, up fourfold from the industry slump in 1999. And the Bush administration is trying to speed the approval process. Scores of drilling rigs have migrated to the area. And as a result, gas production was 31% higher in this region last year - 64% higher in Wyoming - than in 1999, the Energy Information Administration reported. The 'Tight Sands' Issue With all the drilling rigs in Wyoming, it's hard to imagine the energy companies all but ignored this region for years. Consider the Pinedale Anticline, the nation's fourth-largest gas field. Houston-based Ultra Petroleum and its partners will drill 110 wells this year and another 165 next year in a field that has become the cornerstone of a young company with a market value of about $9 billion. Located in the Upper Green River Valley, the Pinedale Field was discovered in 1939. But drilling has been sporadic and, for most of the field's life, commercially inviable. That's because the gas in this field is locked in what's known in the industry as "tight sands," formations of closely packed sand grains with natural gas trapped in the tiny spaces in between. To get the gas to flow out of these formations, a drilling company must pump specially designed fluids under high pressure into a well to create fractures in the rock formations and allow the gas to escape. Though the strategy behind stimulating production in fields like Pinedale has been around for a long time, oil-well service companies have perfected the chemicals and machinery needed to coax gas out of these rocks. The recent high gas prices have given producers the cushion they need to tackle such projects with a vengeance. Nearly a third of the nation's gas output today comes from tight sands and other "unconventional" sources, noted Fred Lawrence, vice president of economics and international affairs for the Independent Petroleum Association of America. With all the new exploration in the Rockies, that percentage is almost sure to rise. In developing a field such as the Pinedale Anticline, though, Ultra Petroleum faces challenges unique to this region. For example, for more than five months of the year the company must curtail operations in this sagebrush-rich, high desert in sight of the Wind River Mountain Range to avoid disturbing migrating mule deer and pronghorn antelope. The Rocky Mountain region also lacks natural gas pipelines, creating a bottleneck that forces producers here to sell their gas at a discount - roughly $3 per thousand cubic feet less than the benchmark price on the Gulf Coast. Other Obstacles Remain With demand for pipeline capacity growing, interstate pipeline operators such as Houston's Kinder Morgan Energy Partners (teamed up with Sempra Energy) and Houston-based El Paso Corp. have jumped in with plans for new, transcontinental pipelines to carry Rocky Mountain resources to gas-starved markets in the East. Whether either or both pipelines will be built remains a question. Stephen Beasley, president of El Paso's Eastern Pipeline Group, said pressure to build a new pipeline is coming not just from Rocky Mountain producers but from gas users eager to diversify their gas supply lines in the wake of this year's hurricanes. Despite the difficulties, the Rockies represent "the biggest play in North America right now, when it comes to natural gas," said Sam McClure, Ultra's production superintendent for the Pinedale Field. Though natural gas is the undoubted driver of this region's energy boom, Houston-based Newfield Exploration Co. is drilling for crude.In the Uinta Basin of northeastern Utah, south of the spectacular Flaming Gorge, Newfield is developing the Monument Butte Oil Field. The rock here also is tight, so the oil flows slowly. Wells in this field produce only about 65 barrels a day. With 772 wells pumping, the whole field yields only about 10,000 barrels a day, comparable to one good well in the deep waters of the Gulf of Mexico. Newfield's costs are high — about $20 a barrel — but with Monument Butte crude selling in the high $50s last week, the company is determined to drill as many as 225 wells a year. For energy companies wanting to do business in the Rockies, finding qualified workers is often their greatest challenge. The entire oil and gas sector is struggling with a shortage of workers. Hundreds of thousands left the industry in the past two decades, burned by the repeated boom-and-bust cycles. Persuading experienced workers to relocate to this remote and often bitterly cold area is difficult. Though conditions in Wyoming's gas fields can be tough, an experienced oil-field crewman can command an annual salary upward of $95,000, industry officials say. Given the growing importance of LNG pipelines, I wanted to start gathering articles on this topic. The goal is to have enough source material to do an LNG 101 kind of article, possibly in about two months. DOE/Sempra Energy's LNG Intro Liquefied natural gas is natural gas that has been super cooled to -260 degrees F. At that temperature, natural gas condenses into a liquid. When in liquid form, natural gas takes up to 610 times less space than in its gaseous state, which makes it feasible to transport over long distances. The storage advantages allow for use of LNG to meet peak demand needs and in certain niche markets such as propane replacement. The U.S.'s demand for natural gas is growing, yet production in the lower 48 is decreasing. The resulting gap can only be met with either Canadian imports, gas from Alaska or LNG. Canadian imports nearly fill the entire gap (15% of total consumption). But Canada's gas production rate also appears to be declining. Demand for natural gas is increasing due to new electric power plants. Gas demand for electricity generation has increased 30% since 1966. And gas demand will likely grow by nearly 5% per year from now on. There were 113 active LNG facilities in the U.S. in 2003, including marine terminals, storage facilities, and operations involved in niche markets such as LNG vehicular fuel. Most of these facilities were constructed between 1965-1975, and are dedicated to meeting the storage needs of local utilities. Approximately 55 local utilities operate LNG plants as part of their distribution networks. Both supply and demand are driving plans for expansion of existing facilities and the construction of new facilities. On the supply side is the interest in finding a market for 2,755 to 3,350 trillion cubic feet of stranded natural gas worldwide. On the demand side is the increased use of natural gas worldwide, which coupled with lower costs associated with LNG processing and delivery, is making LNG a cost-competitive supply source to meet gas demand. Imports of LNG into the United States began with the construction by Distrigas of a marine terminal in Everett, Massachusetts, in 1971. The construction of marine terminals at Cove Point, Maryland, and Elba Island, Georgia, followed in 1978, and a terminal at Lake Charles, Louisiana, was completed in 1982. Operations have ceased at the Cove Point, and the Elba terminal closed in 1980, but reopened in 2001. During 2001, 101 tankers arrived at U.S. marine terminals, carrying a total of 238.1 Bcf in natural gas equivalent. The Everett marine terminal received 39 cargoes and Lake Charles received a record 61 cargoes. Elba Island received one cargo that had been diverted from Distrigas following the September 11 attacks. Each U.S. import terminal is equipped with storage tanks capable of holding at least one tanker load of LNG, and newer and expanded facilities will typically have a capacity closer to two tanker loads. Large tankers hold up to approximately 130,000 cubic meters of LNG in liquid form, or about 2.8 Bcf of regasified LNG. Although the storage tanks at an LNG marine terminal may function as peak-shaving storage, the principal operation of an import terminal is not for gas storage, but rather for receiving the water-borne LNG imports and then regasifying LNG for shipment via pipelines to customers. El Paso's Georgia LNG Facility to Expand Margaret Newkirk, Atlanta Journal-Constitution 12-22 El Paso Corp., parent of Southern Natural Gas, announced yet another expansion of its liquefied natural gas facility on Elba Island near Savannah and the construction of an Elba Express pipeline across North Georgia. Elba Island has one of only four land-based LNG terminals in the United States. Experts - including executives at natural gas company AGL Resources in Atlanta - have been pushing LNG as the best shorter-term way to get new gas supplies into the region, advice that got new urgency after back-to-back hurricanes disrupted supplies from the Gulf Coast this summer. Jim Yardley, president of El Paso Southern Pipeline Group, said the completed project will produce two times the amount of gas per day that is consumed daily in Georgia now. Even including the cost of freezing, shipping, storing and processing, LNG is cheaper than current Gulf Coast natural gas - although consumers won't see all of the savings. LNG, because of its relative scarcity in this region, is typically priced just slightly below what natural gas commands at Louisiana's Henry Hub. The Elba Island facility has three storage tanks now, with a fourth scheduled to be completed in February. The expansion announced Wednesday would add a fifth in 2010 and a sixth in 2012. The company also plans to modify its loading docks to accommodate bigger LNG ships. When finished in 2010, the planned pipeline will run 191 miles northwest from Savannah, connecting with pipelines capable of serving metro Atlanta. The pipeline will also connect with existing pipes that could carry the gas supplies north. Suez of France Proposes Florida Natural Gas Port Associated Press 12-17 Paris-based Suez has proposed building a natural gas terminal in the Atlantic Ocean about 10 miles from Fort Lauderdale's shore. It would also construct pipelines so tankers could unload natural gas at a terminal from which the gas would be piped to power plants. As part of the Calypso Deepwater Port Project, Suez would bring natural gas from Algeria, Egypt, Trinidad or elsewhere. The port would accommodate two tankers at a time, with each tanker requiring about a week to unload gas. The terminal and new pipelines would ease Florida's dependence on two lines that currently bring gas into the state from the Gulf of Mexico. In April, 2004, Florida approved two pipeline projects to carry natural gas from the Bahamas to South Florida. Tractebel Calypso Pipeline, a subsidiary of Suez, was one of the two given five years to construct pipelines. The proposed pipeline from the Bahamas would connect to the Florida Gas Transmission pipeline. Bidding War Chills U.S. Plan To Import Gas Russell Gold, WSJ 12-19 Even with natural-gas prices surging to new heights and heating bills soaring, much of the nation's import capacity remains idle. The nation has four onshore terminals for receiving and processing imported gas, and they are importing only about half the volume they can handle. The reason: U.S. buyers are being aggressively outbid by Europeans and Asians for the limited number of cargoes available. The supply crunch means imports won't cool the U.S. market and natural-gas prices could stay high for years, even as the U.S. builds more terminals to handle overseas gas. "There will be continued competition for supply, certainly through the end of the decade," says Martin Houston, president of North American operations for BG Group PLC, the largest importer of liquefied natural gas into the U.S. With domestic gas production leveled off, the energy industry expected to compensate with imports from the Middle East and Africa, where excess supplies of the fuel are sometimes flared off and never brought to market. Shipping natural gas is a tricky process. The gas is shipped in cold liquefied form, which dramatically boosts volume and must be reheated and returned to a gaseous form at terminals when received. The theory was that if the U.S., the world's largest gas consumer, opened for imports, there would be tankers lining up to discharge their cargo. There was "a self-indulgent, myopic belief that if the U.S. builds a terminal, everyone wants to supply us. And that is what has been wrong," says James Jensen, an industry consultant in Weston, Mass. A pressing global gas shortage has developed, in part because of overseas competition. As the price of liquefying natural gas fell, a global building boom began. While supply increased and the number of cargoes available for purchase on the spot market grew, so too did the number of new import terminals in other countries. Global production capacity for natural gas, in liquefied form, is about 20 billion cubic feet a day, but there are now enough terminals around the globe to eat up twice that volume, according to the Federal Energy Regulatory Commission. A global shortage has developed in recent months, amid supply glitches, cold weather in the United Kingdom and a drought in Spain, which has been turning to liquefied natural gas to make up for a shortfall in hydroelectric power. Natural gas is difficult to transport except by pipeline, and LNG shipments are still a relatively small portion of the overall market. That means the price can vary widely by region, depending on factors such as weather and the availability of alternative fuels. Geography puts the U.S. at a disadvantage. Most supplies of liquefied natural gas for Europe and the U.S. come from West Africa, the Mediterranean and the Middle East. Europe is closer, which makes delivery less expensive. The only supplier close to the U.S. is in Trinidad. Moreover, European buyers currently are willing to pay such a high price that a tanker from Trinidad arrived in the U.K. Tuesday, according to Waterbourne LNG, a weekly publication of Houston energy consulting firm Commercial Services Co. The voyage marked one of the first times liquefied natural gas from the Caribbean had crossed the Atlantic in pursuit of higher prices. The U.S. also faces the problem of being the newest entrant in the market and still a small purchaser. "The larger buyers, the ones with a long history of being in the business and making consistent purchases, are now in the position where they need more," says Rick Grant, president and chief executive at Suez LNG, a subsidiary of French utility company Suez SA that operates an LNG terminal near Boston. "And because of the relationships, they can compete very aggressively in the market for the cargoes that become available." Qatar Finds a Currency of Its Own: Natural Gas Simon Romero, NT Times 12-22 "This was a sleepy little town when I moved here eight years ago," said Mohamad Moabi, from an office overlooking the turquoise waters alongside this Doha, Quatar's crescent-shaped corniche, where dozens of half-built skyscrapers are going up. "Now it's on the frontier of the global economy." Mr. Moabi, the chief economist at Qatar's largest bank, pointed to why this tiny emirate, no bigger than Connecticut, is elbowing aside other energy-rich countries to become the leader in the emerging international market for natural gas. "It helps," he said, "when you have a natural gas field up there that can be extracted for about a century." In a shift that has drawn historical comparisons to the ascent of Saudi Arabia's oil industry several decades ago, Qatar has moved swiftly in recent years to develop its huge offshore natural gas reserves - once dismissed as practically worthless because of the difficulty of transporting gas to distant markets - while cementing strong military and economic ties with the United States. Driven by an ambitious, reform-minded ruling elite, these moves have allowed Qatar to leap ahead of Russia and Iran, the only nations with larger reserves of natural gas, seizing new opportunities to export the fuel to markets in North America, southern Europe and the Far East. Tankers laden with gas supercooled to liquid form already depart each day for Japan and South Korea from the northern port of Ras Laffan, not far from Al Udeid Air Base in the Qatari desert, the American military's main air operations center in the Arabian Peninsula. Soon the ships will start delivering their cargoes to ports in Texas and Louisiana in the most ambitious project to date to bring natural gas from the Middle East to American consumers. These plans, which would help transform the United States into the largest importer of liquefied natural gas, have created some unease at a time when American reliance on oil from the Middle East is still unabated. Even as OPEC tries to strengthen its grip on world oil markets, Qatar has moved to exert greater influence over the trade in natural gas through the creation of the Gas Exporting Countries Forum. With a liaison office in Doha, the group's 12 members, including Algeria, Indonesia and Venezuela, control more than 70% of the world's gas reserves and more than 40% of production. Though in its infancy, the organization has been likened to OPEC in its early efforts to control oil prices, an aspiration that officials here contend is not under consideration. "Natural gas is not as flexible a commodity as oil and is sold in longer-term contracts," Abdullah bin Hamad al-Attiyeh, Qatar's energy minister, said. Indeed, Qatar's ability to emerge as the world's leading producer and exporter of liquefied natural gas, with plans to produce 77 million tons of the fuel by the start of the next decade, depends on cooperation. It is working with Western energy companies and Asian shipping concerns in the construction of an immense industrial complex in Ras Laffan near the maritime border with Iran. "We're building what might be the largest plant facility anywhere in the world," says Wayne Harms, the president of operations in Qatar for Exxon Mobil, the largest foreign investor in the country. "It's happening in a very fast, almost unprecedented period of time," Mr. Harms said, describing the frenzied activity of more than 50,000 workers, largely from India and Pakistan, toiling to build the complexes needed to condense natural gas so it can be shipped across the sea. It has been just a decade since the emir, Sheik Hamad bin Khalifa al-Thani, overthrew his father in a bloodless coup, strengthening ties with the United States and betting on an offshore natural gas reserve of 900 trillion cubic feet - the world's largest purely natural gas reserve, called the North Field - that it shares with Iran. That shift gave Qatar, long a marginal oil producer, a commodity to help it escape the Saudi orbit and the wealth to plot its own path to prosperity. The North Field, discovered by Royal Dutch Shell in 1971 and considered useless at the time because it had no oil and its natural gas was difficult to transport, is now described by some geologists as the second-largest petroleum deposit in the world after the Ghawar oil field in Saudi Arabia. Mr. Attiyeh, the energy minister, said he expected to see some $100 billion invested in the country through the end of the decade. That cash injection is fueling economic growth estimated at 25% in 2004 and 29% this year, before adjusting for inflation, according to Qatar National Bank. As a result, after languishing for much of the last century as a sleepy British protectorate, Qatar is surging in population, up almost 50% since 1997, to an estimated 750,000 in 2004, a number that is expected to grow by an estimated 100,000 this year. (Fewer than 200,000 people in Qatar country are believed to be Qatari citizens.) The surge, led by an influx of poor Asian laborers and large numbers of Americans and European professionals, has left a shortage of housing and office space. Rents in parts of Doha have climbed almost 50% this year. The remaking of Doha is creating a bonanza for international infrastructure companies. With about 30 skyscrapers in various stages of completion, the description of Doha as the "next Dubai," a nod to its flashier neighbor on the Arabian Peninsula, is inevitable here. Still, there is a fundamental difference between the two emirates. Dubai has turned to dream-world architecture and tourism to prepare for the not-so-distant day when its oil runs out; Qatar, its coffers swelling from natural gas sales, shows little sign of contemplating an economy not reliant on energy exports. Andrew Brown, Shell's country manager in Qatar, said that greater natural gas and oil production should result in overall daily energy production equivalent to about 5 million barrels of oil a day by early in the next decade, nearly half the daily oil output of Saudi Arabia. "Over the next five years," Mr. Brown said, "Qatar is going to see an energy boom as significant as any other in the past." Few in Qatar worry that the natural gas frenzy will fizzle anytime soon, despite predictions from some analysts that natural gas prices in countries like the United States and Britain could fall sharply by 2007 or so as large amounts of liquefied natural gas reach the market. Still, the torrid expansion at Ras Laffan, as well as Qatar's increasingly interdependent relations with the U.S. and other gas-importing nations, has created some unease within the prosperity bubble. In an attempt to clamp down on rising infrastructure costs, the government earlier this year unexpectedly imposed a moratorium on new gas export projects. Little seems to be standing in the way of Qatar becoming even richer. One of the country's leading newspapers, The Peninsula, noted recently that Qatar was already the third-wealthiest country, with per capita income of $38,241 in 2004, trailing only Switzerland and Luxembourg. a reminder of why MLPs are in a slump Kinder Morgan had a public offering of 2,600,000 units, with an option to purchase up to 390,000 additional common units to cover over allotments. (PRNewswire 11-03) Crosstex Energy had an offering of 3,500,000 units. As of 11-18 XTEX had shares outstanding of 19.66 million. (PRNewswire 11-15) Atlas Pipeline planed to sell 2,700,000 units. As of 11-18 APL had shares outstanding of 9.51M and a market cap of $418.44 million. (Business Wire 11-18) Enbridge priced 3 million units. As of 11-18 EEP had shares outstanding of 62.21 million and a market cap of $2.88 billion. (Primezone 11-17) Enterprise Products Partners priced 4,000,000 units with an option to purchase up to 600,000 additional units. As of 11-30 EPD has shares outstanding of 385.42 million and a market cap of 9.65 billion. (Business Wire 11-30) On 12-01 Oppenheimer initiated coverage on BPL at Neutral, PPX at Buy, and TPP at Neutral. On 12-13 the MLP Blog reports that "Magellan Midstream [received] a negative S&P move on its debt" - which is news that I am not able to confirm both at the S&P site or at Yahoo. On 12-14 RBC Capital Upgraded PAA from Sector Perform to Outperform. On 12-19 Deutsche Securities Downgraded ETP from Buy to Hold and Upgraded VLI from Hold to Buy. On 12-29 Oppenheimer initiated coverage on KMP at Buy and NBP at Neutral. On 11-24 Wachovia Downgraded EEP from Market Perform to Underperform. On 11-18 Deutsche Securities Initiated VLI at Hold. On 11-17 Citigroup Upgraded PPX from Hold to Buy. NOTE: Please confirm through your own research any numbers on which you are to make a buy, sell or hold decision. The page is ment to be a supliment for those already getting monthly sector updates from their broker. It is the goal of this page to provide more timely data - and perhaps cover a wider array of stocks and different valuation metrics. Data entry errors sporadically happen. Those wishing to contribute DCF data to this site can do so by contacting factoids@flash.net The only way we are going to get consensus DCF stats is if we build them ourselves, and that takes a team effort. This site frequently uses data provided by the members of the 'MLP and Royalty Trust' yahoo group. | |||||||||||||||||||||