Hot MLP Play: Plains All American

The company is currently constructing the Salt Lake City Expansion pipeline that will transport 120,000 barrels per day. PAA has locked in 10-year transportation contracts for this asset. PAA also has the Pier 400 project under development in the Los Angeles basin. This project would provide 200,000 barrels per day of crude offtake from marine deliveries of crude oil into the Los Angeles basin.

In July, Occidental Petroleum Corporation (OXY Quote) purchased 10% of PAA's general partner. OXY is a large crude player with extensive holdings of midstream assets throughout the U.S. One example is OXY's presence in the Permian Basin of Texas, where PAA has a large footprint. I believe that PAA and OXY will collaborate on several crude projects in the future.

The bottom line is, PAA is an integral part of the U.S. energy supply chain. PAA currently yields 10%. In an environment where 10-year Treasuries yield 2.19% and money market funds yield 0%, I believe long-haul pipeline MLPs provide value opportunities for patient investors.