Enbridge Inc. sees its recently announced $300 million investment in Texas facilities as a natural expansion for the owner of North America’s largest midstream network.

“South Texas is kind of the catcher’s mitt,” said Colin Gruending, Enbridge executive vice president and president for liquids pipelines, in an interview with Hart Energy at CERAWeek by S&P Global. He described the region’s role as a terminus for hydrocarbon pipelines bringing products from the Permian Basin, the Haynesville Shale and elsewhere.

During the company’s investor conference on March 6, Enbridge publicized a $200 million investment to upgrade and expand its facilities in Corpus Christi, Texas, and another $100 million to upgrade the capacity of the Gray Oak crude pipeline.

The moves strengthen Enbridge’s position as the primary service provider for crude exports from Corpus Christi, according to Kristy Oleszek, crude oil director for East Daley Analytics, a firm that specializes in the midstream sector.

The $100 million investment in Gray Oak will expand the pipeline’s capacity by 120,000 bbl/d, to a total of 1.02 MMbbl/d. The company is expected to announce an open season for the extra capacity in short order and use drag-reducing agents for the expansion, according to East Daley. Drag-reducing agents are advantageous as they can be used to quickly implement a capacity expansion.

The pipeline project could be ready as early as second-quarter 2024. The open season will more than likely find plenty of takers, as East Daley expects Permian oil production to increase by 245,000 bbl/d by the end of the year.  

“The Gray Oak expansion will be necessary for Corpus Christi to keep up with growth and maintain its share of Permian volumes,” Oleszek said.

In Corpus Christi, Enbridge has aggressive expansion plans. The company spent $200 million buying two docks for the Flint Hills Resources compound. The purchase was adjacent to the Enbridge Ingleside Energy Center, where the company also has plans to add 2.5 MMbbl of storage capacity.

Corpus Christi brings a lot of advantages to Enbridge’s operations, Gruending said. As the Gray Oak line provides a straight shot from the Permian, the quality is better than buying products that have traversed multiple pipelines and terminals owned by other companies.

“You know what you're getting, the quality is better,” he said. Also, the cost of Enbridge’s shipping arrangement, the site’s distance to blue water and other factors contribute to a $0.50 premium.

The Gray Oak Pipeline is also the primary supplier of the Ingleside center. Enbridge currently exports about 40% of all crude volumes leaving Corpus Christi, Oleszek said. Gruending noted that the Gray Oak serves the Houston market as well.

However, Gruending said his company sees the Ingleside center as an ideal platform for other liquids in the future.

“It’s going to create a lot of headroom for us to grow into, over time,” he said. “Both for ammonia export and other commodities as well.

“All the things that advantage the facility for crude export are very portable to NGL or maybe someday even LNG.”

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