Enterprise Products Working Midstream - Analyst Blog

Enterprise Products Partners L.P.'s (EPD) midstream venture continues with the start-up of a natural gas liquid (NGL) fractionator and the addition of new storage capacity.

Enterprise's fourth NGL fractionator has commenced operations at its Mont Belvieu, Texas complex. The partnership started the operation well ahead of schedule with a production capacity of 75,000 barrels per day (BPD). Notably, the cost of the commencement has been well within the budget.

The new addition increases Enterprise's capacity at its Mont Belvieu facility to 305,000 BPD. This additional fractionator provides the required capacity to cope with the increasing NGL volumes from areas such as Barnett Shale in North Texas and the Rockies. The added capacity also offers a new source of NGL on the Texas Gulf Coast and facilitates U.S. petrochemical companies to produce ethylene for global markets at reduced costs.

Moreover, Enterprise added approximately 2 million barrels of new underground storage capacity for motor gasoline and distillates at Mont Belvieu, Texas. The incremental storage capacity is a part of the partnership's endeavor to increase its services across its refined products' network.

Enterprise's recently concluded projects, including the Port Arthur and Texas terminal, enable it to serve customers in the Gulf Coast area with approximately 10 million barrels of refined products' storage capacity. The partnership's distribution growth prospect is closely linked to the successful completion of organic growth projects and Enterprise remains prudent enough in this regard.

With its diverse set of NGL, natural gas, as well as crude oil and refined products midstream infrastructure assets, the partnership possesses fundamental strengths, which will continue to support distribution growth consistently.

We continue to view Enterprise as a core holding in a master limited partnership (MLP) portfolio, given its series of organic growth projects, potential acquisitions, strong balance sheet and solid liquidity position. With the construction of crude oil pipelines, processing plants, fractionators, and storage facilities, Enterprise is significantly expanding its midstream platform in prolific areas.

However, intense competition from MLPs such as Kinder Morgan Energy Partners L.P. (KMP), Enbridge Energy Partners (EEP) and Energy Transfer Equity (ETE) is an added cause for concern. We maintain our long-term Neutral recommendation for Enterprise Products units.

 
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