El Paso Pipeline Partners (UNKNOWN:EPB.DL) recently delivered solid second-quarter results. The MLP reported that its distributable cash flow increased 9% over the prior year's second quarter to $141 million. Let's take a closer look at what fueled that growth as well as what investors can expect from the company going forward.


Ruby Pipeline under construction. Source: Kinder Morgan. 

Drilling down into the quarter
El Paso Pipeline Partners' growth in the quarter was fueled by good performance from the Colorado Interstate Gas Company as the recently completed High Plains expansion project boosted results. In addition to that, income on the quarter received a lift from three drop-down transactions from its General Partner Kinder Morgan. As previously announced, Kinder Morgan sold its interests in the Ruby Pipeline, Gulf LNG, and Young Gas Storage to El Paso Pipeline Partners for a total of $2 billion.

That being said, these positives were partially offset by previously announced rate case settlements that resulted in lower rates on Southern Natural Gas and Wyoming Interstate Pipelines. In addition to that, Wyoming Interstate Pipelines saw lower rates on recent contract renewals. Unfortunately for investors, these lower rates will work against the company and put El Paso Pipeline Partners' distribution growth on hold until after 2016, when its current expansion projects are expected to begin service.

Looking ahead
The biggest news on the quarter, and what investors needed to keep an eye on, is relating to El Paso Pipeline Partners' two proposed LNG export projects. El Paso Pipeline Partners announced that in May, the Federal Energy Regulatory Commission, or FERC, accepted a request by its recently acquired Gulf LNG Liquefaction Company to begin the environmental review process. Gulf LNG, which was one of the three assets dropped down by Kinder Morgan, could begin construction of the LNG liquefaction and export facilities as early as 2016 and begin fueling income to investors by 2019. The fact that FERC accepted the request to begin the study is a positive step forward for the company, though El Paso Pipeline Partners is still very early in the process, and the facility still might not be built.


Source: Kinder Morgan.

The other big project to keep an eye on in regards to El Paso Pipeline Partners' potential LNG export franchise is its Elba Liquefaction Project, which is a joint venture with Royal Dutch Shell (NYSE:RDS-A) (NYSE:RDS-B). The partnership between El Paso Pipeline Partners and Royal Dutch Shell filed a certificate application with FERC in the first quarter to construct and operate a new natural gas liquefaction and export facility in Georgia. If approved by regulators, this project could begin production in late 2016 or early 2017.

So far, both projects remain on track. If both are complete, it would give El Paso Pipeline Partners a true LNG export franchise that should fuel strong distribution growth into the next decade.

Investor takeaway
Overall, El Paso Pipeline Partners delivered the solid quarter that investors were expecting to see. Right now the company is in a transition phase as it waits for organic growth projects to come online starting in late 2016. However, the real upside here is the LNG franchise, which continues to move closer to becoming a reality.