Enterprise to Build New Natural Gas Processing Plant in the Delaware Basin; Announces Start of Service on Mentone 3 and Leonidas

Rhea-AI Summary

Enterprise Products Partners L.P. (EPD) announces expansion of natural gas processing capabilities in the Permian Basin with new plants in Loving and Midland Counties. The company is set to process over 2.8 billion cubic feet per day of natural gas and extract more than 370,000 barrels per day of natural gas liquids.

Positive

• Expansion of natural gas processing capabilities in the Permian Basin will enhance Enterprise's position in the energy market.
• Construction of Mentone West 2 plant in Loving County, Texas, and Leonidas plant in Midland County, Texas, will significantly increase processing capacity.
• Enterprise's strategic investments in natural gas processing facilities demonstrate a commitment to meeting growing demand in the energy sector.
• The company's focus on long-term producer dedications and minimum volume commitments ensures stable revenue streams.
• Enterprise's expansion plans align with the expected growth in domestic NGL production in the Permian Basin, positioning the company for future success.

Negative

• None.

Insights

Energy Sector Analyst

The expansion of Enterprise Products Partners L.P.'s natural gas processing facilities in the Permian Basin signifies a strategic move to capitalize on the region's growing production capabilities. The addition of the Mentone West 2 plant, alongside the recent commencement of the Mentone 3 and the ongoing construction of Mentone West 1 and Orion plants, highlights a significant increase in Enterprise's processing and extraction capacity. With the Permian Basin poised to contribute over 90 percent of domestic NGL production, these developments are likely to strengthen Enterprise's market position.

The long-term producer dedications and minimum volume commitments provide a layer of revenue predictability, which is favorable for Enterprise's financial stability. However, the reliance on continued producer efficiency gains and sustained energy market demand poses potential risks. Stakeholders should monitor the progression of these projects, as delays or cost overruns could impact expected returns. Furthermore, the energy sector's regulatory environment and commodity price volatility remain variables that could affect the profitability of these investments.

Environmental Policy Expert

The expansion of natural gas processing infrastructure in the Permian Basin by Enterprise Products Partners L.P. carries environmental implications that must be considered. The increase in capacity to process and extract NGLs aligns with the broader industry trend towards natural gas, often marketed as a cleaner alternative to coal and oil. However, the environmental impact of expanded gas processing operations, including potential methane emissions and water usage, should be scrutinized.

Environmental regulations and policies could influence the long-term viability of such projects. While current trends favor natural gas, shifts in policy towards renewable energy sources could alter the landscape in which Enterprise operates. It's essential for investors to assess the company's adherence to environmental standards and its preparedness for potential regulatory changes that could impose additional operational costs or require technological upgrades to reduce environmental footprints.

Market Research Analyst

The mention of the Permian Basin's expected dominance in NGL production by the end of the decade suggests a bullish outlook for the region's energy sector. Enterprise's infrastructure expansions appear to be a calculated response to anticipated market demand. The focus on long-term producer dedications indicates a strategy to secure stable supply chains and mitigate market fluctuations.

Investors should consider the competitive landscape and Enterprise's ability to maintain its market share amidst increasing domestic and international demand for NGLs. The strategic location of these facilities could offer Enterprise a logistical advantage, potentially translating to cost efficiencies and stronger bargaining positions with downstream clients. However, the market's response to increased supply capacity will be crucial, as it may affect NGL prices and, consequently, Enterprise's revenue streams.

HOUSTON--(BUSINESS WIRE)-- Enterprise Products Partners L.P. (NYSE: EPD) (“Enterprise”) today announced plans to further expand its natural gas processing capabilities in the Permian Basin with construction of the Mentone West 2 plant in the Delaware Basin. The new facility, to be located in Loving County, Texas, will have the capacity to process more than 300 million cubic feet per day (“MMcf/d”) of natural gas and to extract in excess of 40,000 barrels per day (“BPD”) of natural gas liquids (“NGL”). The plant is expected to begin service in the second quarter of 2026.

Elsewhere in the Delaware Basin, Enterprise has begun service on its Mentone 3 natural gas processing plant, which is also capable of processing over 300 MMcf/d of natural gas and extracting more than 40,000 BPD of NGLs. Construction of the Mentone West 1 plant, formerly known as Mentone 4, is on schedule and projected to begin service in the second half of 2025. Following completion of these projects, Enterprise will have the capacity to process more than 2.8 billion cubic feet per day (“Bcf/d”) of natural gas and to extract in excess of 370,000 BPD of NGLs in the Delaware Basin.

In the Midland Basin, Enterprise announced today that the company’s Leonidas natural gas processing plant in Midland County, Texas has begun service, and construction of the Orion natural gas processing facility is proceeding on schedule with service expected to begin in the second half of 2025. Each of the plants has the design capacity to process more than 300 MMcf/d of natural gas and to extract over 40,000 BPD of NGLs. With the completion of Orion, Enterprise will have the capacity to process 1.9 Bcf/d of natural gas and to extract more than 270,000 BPD of NGLs. The plants in the Delaware and Midland Basins are supported by long-term producer dedications and minimum volume commitments.

“The Permian Basin is expected to account for more than 90 percent of domestic NGL production by the end of the decade as producers and oilfield service companies continue to push the envelope and develop new and more efficient techniques in one of the world’s most prolific energy basins,” said A.J. “Jim” Teague, co-chief executive officer of Enterprise’s general partner. “With the expansion of our natural gas processing network, Enterprise is facilitating this growth and providing safe and reliable access to domestic and international markets.”

Enterprise Products Partners L.P. is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. Services include: natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage and marine terminals; crude oil gathering, transportation, storage and marine terminals; petrochemical and refined products production, transportation, storage, and marine terminals and related services; and a marine transportation business that operates on key U.S. inland and intracoastal waterway systems. The partnership’s assets include more than 50,000 miles of pipelines; over 300 million barrels of storage capacity for NGLs, crude oil, refined products and petrochemicals; and 14 billion cubic feet of natural gas storage capacity. Please visit www.enterpriseproducts.com for more information.

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical fact, included herein that address activities, events, developments or transactions that Enterprise and its general partner expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations, including required approvals by regulatory agencies, the possibility that the anticipated benefits from such activities, events, developments or transactions cannot be fully realized, the possibility that costs or difficulties related thereto will be greater than expected, the impact of competition, and other risk factors included in Enterprise’s reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Except as required by law, Enterprise does not intend to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240403594611/en/

Randy Burkhalter, Investor Relations, (713) 381-6812 or (866) 230-0745

Rick Rainey, Media Relations (713) 381-3635

Source: Enterprise Products Partners L.P.

FAQ

What is the capacity of the Mentone West 2 plant in Loving County, Texas?

The Mentone West 2 plant will have the capacity to process more than 300 million cubic feet per day of natural gas and extract in excess of 40,000 barrels per day of natural gas liquids.

When is the Mentone West 1 plant expected to begin service?

The Mentone West 1 plant is projected to begin service in the second half of 2025.

How much natural gas processing capacity will Enterprise have in the Delaware Basin after the completion of the projects?

Enterprise will have the capacity to process more than 2.8 billion cubic feet per day of natural gas and to extract in excess of 370,000 barrels per day of natural gas liquids in the Delaware Basin.

What is the design capacity of the Leonidas natural gas processing plant in Midland County, Texas?

The Leonidas natural gas processing plant has the design capacity to process more than 300 million cubic feet per day of natural gas and to extract over 40,000 barrels per day of natural gas liquids.

Who is the co-chief executive officer of Enterprise's general partner?

A.J. 'Jim' Teague is the co-chief executive officer of Enterprise's general partner.