Enterprise Products To Proceed With ATEX Expansion Project
Zacks Investment Research | Oct 14, 2019 10:15PM ET
Enterprise Products Partners L.P. (NYSE:EPD) recently completed a binding open season to gauge shipping commitments for the proposed 45,000 barrels per day (BPD) expansion of capacity on the Appalachia-to-Texas (“ATEX”) ethane pipeline. The 1,200-mile pipeline induces the development and use of domestic energy in the United Sates.
The partnership intends to proceed with expansion works, which are expected to enable it to transport more ethane from customers in Marcellus and Utica shales in the Appalachian region to the natural gas liquids (NGLs) storage complex in Mont Belvieu, TX. Notably, the 145,000 BPD pipeline provides producers with an access to petrochemical plants located in the Gulf Coast.
Enterprise Products intends to boost the pipeline’s capacity with the help of a combination of pipeline looping and hydraulic improvements. The midstream energy firm is expected to bring modifications to ATEX’s existing infrastructure for increasing transportation capacity, which is expected to come online by 2022.
The partnership expects demand for ethane to rise in the coming years, which validates its move of expansion. Enterprise Products anticipates majority of the demand to come from the domestic market. The new crackers are expected to utilize around 1 million BPD of ethane. With export of ethylene and polythene — major components of chemical and plastic industries — on the rise, the demand for ethane is expected to jump by 2025. As such, the expanded capabilities — which are expected to come into service in 2022 — will prepare the partnership to earn huge profits from NGL transportation services.
Similarly, to earn more profits from rising U.S. crude production, the partnership decided to further expand the Midland to ECHO crude oil pipeline system, earlier this month. Enterprise Products intends to construct a pipeline to link its 6-million-barrel Midland, TX, storage facility to the ECHO Terminal in Houston, TX, through the Eagle Ford system in South Texas. The pipeline is expected to come online in the first half of 2021.
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Enterprise has gained 12.2% year to date compared with 6.5% growth recorded by the Zacks Investment Research
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