11 Sep

Why exports will impact Enterprise Products Partners’ future

WRITTEN BY Alex Chamberlin

Exports

Enterprise Products Partners (EPD) operates a marine terminal on the Houston Ship Channel. It’s on the U.S. Gulf Coast. The terminal is able to load propane and butane onto tanker vessels.

EPD completed an expansion in March 2013. The expansion increased its loading capacity from four million barrels per month to 7.5 million barrels per month.

Liquefied petroleum gas (or LPG) mainly consists of natural gas liquids (or NGLs) like propane and butane. LPG is used as a feedstock in ethylene plant operations. It’s also used for power generation and heating purposes.

Why exports will impact Enterprise Products Partners’ future

In September of last year, EPD announced that it would spend money to expand its LPG export terminal. This would increase the loading capacity from 7.5 million barrels per month to approximately nine million barrels per month. It’s expected to be complete in 1Q15.

In January 2014, EPD announced that its export capacity would expand more. It expanded from nine million barrels per month to over 16 million barrels per month.

EPD plans a 1.5 million barrels per month expansion to come online in 1Q15 at its Houston LPG export facility. It expects an additional seven million barrels per month expansion by 4Q15.

The LPG export terminal is supported by a 50-year service agreement with Oiltanking Partners LP (or OILT). Oiltanking will provide EPD with additional dock space and related services.

In May 2014, EPD started exporting diesel from its Beaumont refined products marine terminal. It also started exporting motor gasoline from the facility in August. The company expects the terminal’s capacity to be fully subscribed.

Enterprise starts condensate exports

On 23 June, 2014, the U.S. Commerce Department gave Pioneer Natural Resources (PXD) and Enterprise Products Partners (EPD) permission to export a type of ultra-light oil known as “condensate.” EPD started exporting refined products from its Beaumont Marine terminal in Texas.

U.S. crude oil export has been banned since the 1970s. However, U.S. companies can export refined fuel like gasoline and diesel. Loosening the ban will allow EPD to export its refined products more in future.

Not just EPD

Another master limited partnership (or MLP) that’s building LPG or ethane export terminals includes Targa Resources (NGLS). Exports will also benefit the upstream energy companies like Chesapeake Energy (CHK) and Range Resources (RRC). CHK and RRC are components of the S&P Oil and Gas Exploration and Production ETF (XOP).

In the next part of the series we’ll discuss why exports could become a “game-changer” for the U.S. We’ll also discuss how the U.S. shale boom will drive these exports.

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