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A Dark Horse for NGL Upside in 2024

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The Permian Basin will drive new NGL supply growth in 2024, as East Daley Analytics highlighted in our recent 1Q24 NGL webinar. Yet it may come as a surprise to investors which midstream company will see the biggest lift.

EDA expects NGL production to grow by 280 Mb/d on average in 2024 in the NGL Network Model. Almost 200 Mb/d, or nearly 70% of that growth will occur in the Permian (see figure).

Enterprise Products (EPD) and Targa Resources (TRPG) have garnered the most attention recently in the Permian NGL space, announcing new construction for gas gathering and processing plants (a combined 2.3 Bcf/d), NGL pipelines (combined 1.0 Mb/d), new fractionation trains (0.6 Mb/d), and new LPG export facilities (0.4 Mb/d).

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However, we expect Energy Transfer (ET) to win the most growth volumes in 2024 given latent capacity on its Lone Star NGL pipeline system, while EPD and TRGP’s NGL pipes are largely constrained until their growth projects come online in early 2025 (see table).

Enterprise transported about 550 Mb/d in 4Q23, bumping up against nameplate capacity in the NGL Network Model, and we believe Targa flowed at least 615 Mb/d on its Permian-to-Mont-Belvieu pipeline segment. That would mean the pipeline is already at capacity, given prior comments by management alluding to effective pipeline capacity of 650 Mb/d with the addition of pump stations.

Producers fueling NGL production growth behind these three midstream behemoths include EOG, Chevron (CVX), ConocoPhillips (COP) and ExxonMobil (XOM), to name a few. Clients can track plant inlet volumes and the gas interstate meter samples for these producers throughout the year in Energy Data Studio. - Rob Wilson, CFA Tickers: CVX, EOG, EPD, ET, TRGP, XOM.


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