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What Trends in PAA’s Facilities Segment’s Volumes Indicate

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Services offered

Plains All American Pipeline’s (PAA) Facilities segment contributed ~29% to the company’s total 4Q16 EBITDA.[1 earnings before interest, tax, depreciation, and amortization] It provides storage, terminals, and throughput services for crude oil, NGLs (natural gas liquids), natural gas, and refined products. The segment also provides NGL fractionation services and processes natural gas and condensate.

The company’s Facilities segment generates revenues as fees charged for storage, terminaling, fractionation, and processing services offered for various oil and gas products. As a majority of the segment’s revenues are fee-based, they are not directly sensitive to changes in commodity prices.

The chart above shows the segment’s average monthly volume and adjusted EBITDA over the last seven years.

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2017 outlook

Plains All American expects the performance of its Facilities segment in 2017 to be relatively flat compared to 2016. PAA expects the segment’s EBITDA to grow due to crude storage capacity that is expected to be placed in service in 2017, as well as the completion of Canadian NGL storage and fractionation projects. However, this could be offset by the impact of asset sales.

Segment assets

PAA’s Facilities segment has a crude oil and refined products storage capacity of ~80 million barrels. It has NGL storage capacity of ~32 million barrels and natural gas storage capacity of ~97 Bcf (billion cubic feet). The segment has nine natural gas processing plants and eight fractionation plants. It owns a condensate processing facility, which extracts NGLs from condensate.

There was a marginal 2% rise in volumes in 2016 compared to 2015, but the segment’s adjusted EBITDA increased 15%. For 2016, the segment’s profit was $0.43 per barrel.

In the next part, we’ll look at PAA’s Supply and Logistics segment’s performance over the years.

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