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How EPD’s Crude Oil Transportation Volume Affects Revenue

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Volumes transported

Transported volumes have increased significantly for EPD’s Crude Oil Pipelines and Services segment due to the expansion of the Eagle Ford Crude Oil Pipeline system and the Seaway Pipeline. Transported volumes increased 42% from 2012 to 2013 and 9% from 2013 to 2014. Overall crude oil transportation volume has been growing since 2010.

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How the Onshore Crude Oil Pipelines segment earns revenue

Revenue from crude oil transportation is based on a fixed fee per barrel transported multiplied by the volume delivered. Transportation fees charged from shippers are based on either tariffs that government agencies regulate or contractual arrangements. EPD’s crude oil terminal subsegment generates revenue by charging customers for crude oil storage based on storage capacity reservation agreements. Crude oil marketing activities generate revenues from the sale and delivery of crude oil purchased either directly from producers or from others on the open market. Sales contracts are generally settled with the physical delivery of crude oil to customers.

Key ETFs and stocks

Some of the MLPs that compete with Enterprise Products Partners (EPD) and have expanded their crude oil pipeline capacity recently are Williams Partners (WPZ), EQT Midstream Partners (EQT), Genesis Energy (GEL), and TC Pipelines (TCP). These MLPs have a combined weight of 23.5% in the Alerian MLP ETF (AMLP).

In the next part of the series, we’ll discuss the transportation volume and the operating margin of the Onshore Crude Oil Pipelines and Services segment.

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