Energy Transfer Partners (ETP) provides liquid transportation and storage services, including NGLs (or Natural Gas Liquids) transportation, storage, and fractionation services primarily through Lone Star Holding. Regency Energy Partners (RGP) formed Lone Star Joint Venture with ETP in 2011. Liquids Transportation was ETP’s top performing segment during 2014.
The segment’s liquids transportation volumes increased by 109,000 Bpd (or barrels per day) during 2014. The average daily volumes increased as a result of a second 100,000-Bpd fractionator commissioned at Mont Belvieu, Texas. In November 2014, ETP announced its plan to construct a third fractionator in Mont Belvieu, Texas, which will further increase Lone Star’s fractionation capacity to 300,000 Bpd.
The segment earns its revenue mostly from liquid transportation and NGL storage. For liquid transportation, the company charges fees under dedicated contracts or take-or-pay contracts. Under a dedicated contract, customers agree to deliver total NGL output from processing plants, while take-or-pay contracts have minimum throughput commitments, which means that customers are required to pay regardless of the volume transported. Storage revenues are derived from storage fees and throughput fees.
ETP’s liquid transportation and storage revenues jumped by $1,784 million during 2014, while Enterprise Product Partners’ (EPD) NGL Pipelines & Services segment saw a flat revenue during 2014. EPD is a constituent of both the Alerian MLP ETF (AMLP) and the First Trust North American Energy Infrastructure Fund (EMLP).
The transportation gross profit, which contributes the most towards the segment’s gross profit, increased to $312 million in 2014 from $187 million in 2013, a change of $125 million. The transportation gross profit increased due to higher volume transported and higher NGL production from processing plants.