MarkWest Opens Cryogenics Plant - Analyst Blog

Natural gas processor and distributor MarkWest Energy Partners LP MWE declared that Bluestone II – a cryogenic processing plant − has started operating.  

The new plant is part of Keystone Midstream Services LLC's properties at Butler County, PA that was acquired by the partnership in 2012. It will augment MarkWest Energy's processing capacity to 120 million cubic feet each day (MMcf/d), once the plant starts operating in full capacity.

Additionally, MarkWest Energy has finished the construction of a fractionation plant of 20,000 barrels per day capacity at the Bluestone facility. The fractionation plant will break the processed natural gas liquid into its component ethane which will be transported through a newly constructed pipeline – covering 32 miles – to Mariner West.

MarkWest Energy revealed that the Bluestone II processing unit will mainly support the increased natural production in the Marcellus play by Rex Energy Corp. REXX − an exploration and production firm. Moreover, in order to support its increased processing and fractionation business, the partnership has been expanding its gathering facility in the Butler County area.

In a separate press release, MarkWest Energy announced that its processing and fractionation facilty at the Houston complex has restarted operations. The unit had stopped working on May 28, 2014 following unfavorable weather. The Houston, PA facility has three processing units with total capacity of roughly 355.0 MMcf/d. The facility also has a fractionation plant with capacity of 98,000 barrels per day.

Denver, CO-based MarkWest Energy, a master limited partnership MLP, is engaged in the gathering, processing and transmission of natural gas, transportation, fractionation and storage of natural gas liquids (NGLs), and the gathering and transportation of crude oil.

We like MarkWest Energy's high-quality and diverse portfolio of midstream assets, which generate stable and recurring revenues by way of long-term fee-based contracts. However, MarkWest Energy is more sensitive to commodity prices compared to other MLP subgroups. As a result, collapsing energy prices have adversely affected their cash flow stability.

As a result, MarkWest Energy currently has a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the same industry like Boardwalk Pipeline Partners LP BWP and Delek Logistics Partners LP DKL. Both stocks sport a Zacks Rank #1 (Strong Buy).