Enterprise Products, an energy pipeline operator based in Houston, has unveiled ambitious expansion plans in a strategic move to meet the growing global demand for natural gas liquids (NGLs).
The company is set to establish a 550-mile pipeline from the Texas Permian Basin, construct new natural gas processing plants, and transform an existing oil pipeline in Texas into one dedicated to NGL transportation.
Executive Vice President of Enterprise Products, Christian Nelly, emphasized the immediate need for NGL takeaway during an earnings call with analysts and investors. This move is part of the company's renewed focus on NGLs, essential components for producing plastics and gasoline, a sector experiencing substantial growth coupled with the flourishing U.S. export market.
Enterprise Products posted earnings of 60 cents per share in the last quarter, falling short of the consensus estimates of 63 cents as projected by analysts. This shortfall led to a 0.8% decline in the company's shares, valued at $26.22 during midday trading on Tuesday.
The company's expansion strategy includes the construction of a 550-mile pipeline with the capacity to transport up to 600,000 barrels per day (bpd) of NGLs from the West Texas shale fields to Houston.
Enterprise Products expects full ownership of this pipeline, with operations set to commence in the first half of 2025.
Additionally, the company plans to build two new natural gas processing plants and a fractionation unit designed to effectively separate the diverse components of NGLs.
Enterprise Products is taking preliminary steps to convert the Seminole Pipeline, transporting up to 210,000 bpd of crude oil, into a conduit for NGLs starting in December.
The pipeline, which has historically transported NGLs, switched to shipping crude oil in 2019. The company's Midland-to-ECHO 2 pipeline, designed to transport crude oil from the Permian Basin of West Texas to Houston, was created by converting a segment of the Seminole pipeline.
Moreover, the company has also indicated that its deepwater oil-export project, Sea Port Oil Terminal, will likely receive construction approval by the end of the year.
Enterprise Products forecasts capital investments for expansion projects 2024 to range between $3 billion and $3.5 billion, encompassing the newly announced projects. This represents an increase from the current year's estimated $3 billion spending.
As Enterprise Products seeks to meet the surging demand for NGLs and adapt to market dynamics, their expansion initiatives are expected to play a crucial role in the regional and global energy infrastructure landscape.