Plains All American Offers High Yields and 20%+ Total Return Potential in Pipeline MLP Industry Analysis

Plains All American is a pipeline MLP with high yields and potential for 20%+ total return. The article focuses on the pipeline MLP industry, which is defensive in nature and out of favor. Plains All American is highlighted as a potential investment opportunity due to its high yields and potential for total returns.

Plains All American Pipeline LP (PAA), a major pipeline master limited partnership (MLP), has recently encountered quality issues in its crude oil pipelines linking the Permian shale basin to the Corpus Christi export hub. According to sources familiar with the matter and a notice seen by Reuters, the pipelines are facing problems with high mercaptans, naturally-occurring sulfur compounds Plains All American’s Permian pipelines facing quality issues, sources say^[1].

The issue has prompted PAA to implement a new fee structure. Effective October 1, PAA will charge a half-dollar fee on every barrel that fails to meet mercaptan specifications on some of its pipelines in the Gulf Coast region Plains All American's Permian pipelines in Texas facing oil quality issues, sources say^[2]. This notice, sent to shippers, serves as a reminder of existing tariff provisions for off-spec barrels across its system.

The quality issues could force Gulf Coast refiners, particularly those in the Corpus Christi region, to seek alternative sources for Midland crude oil produced in the Permian. This could potentially disrupt the supply chain, as Corpus Christi exports over 2 million barrels per day (bpd) of crude oil Plains All American's Permian pipelines in Texas facing oil quality issues, sources say^[2].

PAA is currently investigating the cause of the contamination. Given the significant volume of crude oil exported from Corpus Christi, any prolonged quality issues could have broader implications for U.S. crude exports.

Investors should closely monitor the situation, as it could impact PAA's operational costs and potentially affect its high yield and total return potential. However, it is too early to predict the extent of the impact on PAA's financial performance.