El Paso Proceeds on Ruby Pipeline – Analyst Blog

El Paso Corporation (EP) cleared another hurdle receiving the right-of-way grant from the Bureau of Land Management (BLM) for its Ruby Pipeline project. The grant is conditional upon the final completion of the cultural treatment plans and related agreements on federal lands along Ruby’s 680-mile route.

 

In April 2010, Ruby received a Certificate of Public Convenience and Necessity from the Federal Energy Regulatory Commission (FERC). El Paso plans to begin construction as soon as it receives a final go-ahead signal from FERC. El Paso expects the $3 billion Ruby project to be operative in March 2011.

 

 

El Paso’s 42-inch interstate natural gas pipeline will access significant Rockies supplies and bring them to markets in California, Nevada and the Pacific Northwest. It is expected to transport natural gas from an existing supply hub at Opal, Wyoming, to interconnections near Malin, Oregon. It will have an initial capacity of up to 1.5 billion cubic feet per day.

 

Additionally, El Paso is tying up with Global Infrastructure Partners (“GIP”) for investments of up to $700 million for the Ruby project. Once the closing conditions are satisfied, GIP will acquire a 50% equity interest in the project.

 

Houston, Texas-based El Paso Corporation is a major player in both the natural gas transmission & exploration and production space in the U.S. It provides natural gas and related energy products in a safe, efficient and dependable manner.

 

 

The company’s high-grade exploration and production assets and large inventory of projects offer significant value in the long run. Once completed, the Ruby Pipeline will play an important role in linking abundant supplies of cleaning-burning natural gas in the Rockies to the markets in the western states.

 

We believe that El Paso’s management competencies and access to financing will enable successful execution of its industry leading pipeline backlog going forward.

 

However, we see the stock performing in line with the broader market and rate it as Neutral, supported by our Zacks #3 Rank (Hold).