First Take: July 6, 2023
- At the end of June, Enterprise (EPD) received approval from the Texas Railroad Commission for a new 630-mile NGL pipeline. The project appears to follow the same right-of-way as the company's Shin Oak NGL pipeline.
- If constructed, the new pipeline would connect EPD's Delaware and Midland processing complexes to its US Gulf Coast assets, where EPD holds a dominant share of fractionation and export capacity in the Houston/Mont Belvieu area.
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- Although EPD is actively expanding Shin Oak by +275 Mb/d to 825 Mb/d, Permian supply growth suggests the expanded pipe out of the basin will be tight by YE2027. We model egress hits over 90% utilization, making the case for a new pipe to be constructed.
- Like other midstream companies, Permian infrastructure is at the core of Enterprise's strategy. EPD has sanctioned a $3.8B capital program in 2023-24, nearly all tied to the basin.
- EPD will phase in some of these projects over the next nine months, starting with four new processing plants (two at each of its Permian processing complexes) for a combined capacity of 1.2 Bcf/d. These will serve as a backbone for future supply.
- Enterprise is set to report 2Q23 earnings at the beginning of August, when we hope for an update on this proposed pipeline project.
- Be on the lookout for our updated financial outlook on EPD (released later next week), which can be accessed via the
For more questions, reach out to AJ O'Donnell. |