Enterprise Products Partners LP is the largest publicly traded energy partnership, which made it very popular during the National Association of Publicly Traded Partnership’s (NAPTP) investor conference.

One of the reasons that the company has been able to attain an enterprise value of more than $70 billion is through its diversified, balanced and integrated system that serves producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals and refined products.

“We have a very unique set of assets and go about our growth in a way that is a bit different than some of our peers,” Enterprise’s Chief Executive, Mike Creel, said during the conference.

This asset base provides the firm with diversified cash flow and volatility-risk management. Although this diversity has been a part of Enterprise for quite some time, it wasn’t always as clear to investors prior to consolidating its assets through mergers with Teppco Partners in 2009 and Duncan Energy Partners in 2011. The partnership also hasn’t had a general partner (GP) since it acquired its GP, Enterprise GP Holdings, in 2010.

These moves brought everything under one roof while also lowering its cost of capital and increasing accretion for its investors. “We have a very simple, investor-friendly format [now]. We had a complicated format once upon a time, and we think simple is better,” said Creel. The company’s NGL pipelines and services division makes up the largest company segment, but Enterprise’s crude oil pipeline and services division is its biggest growth segment.

Creel highlighted some of the company’s most important projects as being three expansion projects in the Rockies, five new projects in the Gulf Coast, the looping of the Seaway Pipeline in the Midcontinent and construction and repurposing related to the Appalachia-to-Texas (ATEX) Express Pipeline in the Northeast. The company achieved first-mover status in the Rockies due to its projects in the Piceance and is extending this position through its expansion of the Mid-America Pipeline (MAPL), which will expand capacity from 275,000 barrels (bbl.) of NGLs per day to 350,000 bbl. per day through the addition of 265 miles of pipe. It is expected to be online in the second quarter of 2014.

Enterprise is working on joint ventures with DCP Midstream and Anadarko Petroleum Corp. on the other two projects in the Rockies: the Front Range and Texas Express pipelines. The Texas Express system will transport up to 280,000 bbl. per day of NGLs 580 miles from Skellytown, Texas, to Mont Belvieu, Texas. The pipeline is expected to be in-service in this quarter and be expandable to a capacity of 400,000 bbl. per day.

The Front Range system is expected to be brought into service in the fourth quarter and will run 435 miles from the Denver-Julesburg basin to Skellytown and will interconnect with both the MAPL and Texas Express pipelines. It will have an initial capacity of 150,000 bbl. per day and be expandable to 230,000 bbl. per day.

The ATEX Express will repurpose a 16-inch refined products pipeline while extending it with a new 20-inch pipeline into the Marcellus and Utica regions in order to transport ethane from these plays to the ethane crackers on the Gulf Coast. It will run 1,230 miles with an initial capacity of 190,000 bbl. per day when it is brought online in the first quarter of 2014.

In relation to this project is the AEGIS ethane header pipeline system that will extend from Mont Belvieu to Louisiana’s Mississippi River industrial corridor, where it will connect with an existing ethane pipeline and tie into the ATEX Express.

“Our ethylene customers will have an extensive supply of ethane whenever they need it that will be connected to our Mont Belvieu storage system. It will be a source of ethane that will be hard [for other companies] to replicate,” Creel said.

Since the downturn in natural gas and NGL prices that caused producers to change direction to crude, Enterprise has been doing the same. He noted that the first step in this process was its joint venture with Enbridge to reverse the 512-mile Seaway pipeline. He added that since coming online earlier this year, the project has been transporting 300,000 bbl. per day of crude since a large amount is heavy Canadian crude that slows the system down. This capacity will be increased through the construction of a parallel pipeline that will provide the company with flexibility to move different types of crude on each line, which will maximize throughput.

The 350,000-bbl.per-day Eagle Ford crude pipeline is a joint venture with Plains All American Pipeline LP and is set to be in-service in the third quarter of this year. The system will include a 140- mile line running from Gardendale, Texas, to Three Rivers, Texas, to Corpus Christi, Texas. It will also include a 35-mile segment that will run from Three Rivers to the company’s Lyssy station in Wilson County, Texas.

Arguably, the largest entry into crude is the Enterprise Crude Houston (ECHO) storage terminal, which will see capacity increase to 6 million bbl. The terminal will be connected to the Seaway Pipeline and the Port Arthur, Texas, market. In order to obtain direct access to various refineries, Enterprise is building additional pipeline. “We think this is going to be a key facility for the U.S. Gulf Coast,” Creel said.

Another major effort has been the expansion of its propane-export capacity, which allowed the company to load 46 million bbl. from its facilities in 2012. He said that this figure is expected to increase to 62 million bbl. this year.

In addition to foreign demand for propane, Enterprise anticipates greater need for propane stocks in the U.S. to meet domestic demand for propylene due to the increased usage of ethane versus naphtha. The huge production increase in shale play production is causing the U.S. petrochemical industry to retool its systems to maximize ethane consumption because of its favorable economics.

This is significantly reducing propylene production from ethylene crackers by 36%, but demand has not fallen. In order to meet supply with demand levels, Enterprise announced plans to build one of the largest propane dehydrogenation units along the Gulf Coast. This facility, expected to begin operations in third-quarter 2015, will consume up to 35,000 bbl. per day of propane and produce 1.65 billion pounds per year of polymer-grade propylene.

While Enterprise has approximately $7.5 billion of capital projects in development, company officials said they will seek to monetize or repurpose assets that don’t fit its diversified growth model.

“We don’t just go out and collect assets. We like to build systems. We don’t manage a portfolio, we manage businesses,” Jim Teague, the company’s chief operating officer, said during its recent analyst meeting.

He added that any assets Enterprise acquires or builds has to fit with its current assets in order to ensure that assets current projects are not stranded and are tied to most of the key supply basins and end-use markets.

Comments