Enterprise Product Partners announced a $3.1 billion network build-up before its Oct. 31 third-quarter earnings, with a heavy expansion on its NGL shipping capacity on tap.
Executives made the decision after considering steadily rising demand for NGL over the last few years, and especially after the recent Exxon Mobil acquisition of Pioneer Natural Resources.
“I guess what changed is the opportunities were there,” said Randy Fowler, Enterprise Products co-CEO and CFO. “We thought ... it is the right time to go.”
Besides the new projects, Enterprise Products also announced that the Seminole pipeline will be converted from shipping crude to shipping NGLs in December. The 1,281-mile Seminole pipeline, which has a capacity of 210,000 bbl/d of crude, transports materials from Hobbs, New Mexico. to Mont Belvieu, Texas.
“We took Seminole’s crude service because we need NGL takeaway right now, until the Bahia pipeline gets in service,” Fowler said. The Bahia is a 550-mile NGL pipeline that will take material from the Permian Basin to Enterprise’s fractionation complex in Chambers County, Texas. It’s expected to begin service in 2025.
Besides the Bahia pipeline, the $3.1 billion in capital projects is dedicated to two natural gas processing plants, an NGL fractionator and an associated deisobutanizer at the Chambers County complex. All projects are expected to be online by 2025.
Enterprise’s announcement of an NGL network expansion was echoed by another midstream company. On Oct. 31, Marathon Petroleum’s midstream company, MPLX, stated that its Whistler pipeline expansion was completed at the end of the third quarter. The project raised the pipeline’s capacity from 2.0 Bcf/d of natural gas to 2.5 Bcf/d of natural gas. The pipeline serves the Permian and terminates near Corpus Christi. For NGLs, the company expects to have its expansion project for the BANGL pipeline, a joint venture between MPLX, WTG and Rattler, complete by the first half of 2025. The expanded pipeline will have a capacity of 200,000 bbl/d.
Enterprise Products executives decided that an aggressive expansion was warranted, given the current state of the market, even if other midstream services were also expanding.
“I look at what somebody like (the) Exxon CEO said about getting more efficient and getting better recoveries, and I think we’re just scratching the surface,” said Jim Teague, co-CEO of Enterprise Products. Exxon Mobil recently acquired Pioneer in a $59.5 billion deal that focused on acreage in the Permian.
Enterprise made its estimates for what it would need by tracking Exxon Mobil’s potential plans for the area.
Exxon’s data is “very hard to set your watch to,” said Tony Chovanec, Enterprise Products’ vice president for fundamentals and supply appraisal, adding there are no indications that production will drop.
“I have to tell you when I look at what’s going on relative to activity and profitability for the producer, I have to ask myself what’s going to change this trajectory in 2024 or for that matter, what’s going to change in 2025?” Chovanec said.
For third-quarter 2023, Enterprise Products reported a drop in total revenues from last year. Overall revenues came in at $12 billion for the quarter, as opposed to $15.5 billion from the same period of 2022. Teague said that, despite shipping record volumes on its system, earnings dropped with low commodity prices and record heat in August and September that hampered the company’s operating capacities at several locations on its pipeline network.