Encouraged by the mounting production volume at the Eagle Ford Shale in South Texas, Enterprise Products Partners L.P. (EPD) has plans to install a sixth natural gas liquid (NGL) fractionator, with a capacity of 75,000 barrels per day (BPD), at the Mont Belvieu complex in the state.
The partnership has already gained customary approvals as well as permits to initiate construction of the new facility without any delay. The unit is expected to be in service in early 2013.
Subsequently, the pipeline operator would be able to fractionate over 450,000 BPD NGLs at the Mont Belvieu plant, boosting Enterprise’s system-wide net fractionation capacity to more than 780,000 BPD.
Additional capacity at Mont Belvieu, which has the largest gas liquids storage facility in the country, will allow it to hold about 75,000 BPD of mixed NGLs and an incremental 30,000 BPD of y-grade from the second phase of expansion at its Yoakum processing facility in Lavaca County, Texas.
Like Enterprise’s fifth Mont Belvieu fractionator, which is currently under construction, the upcoming unit will also be fully contracted after its start-up. The fifth fractionator is scheduled for completion in the fourth quarter of 2011.
As Eagle Ford Shale is gaining traction, pipeline companies and midstream operators are increasingly looking to the South Texas play for opportunities to build new networks. Hence, exploration activities of the companies have made Eagle Ford the most happening shale play. Approximately 170 rigs are presently operating in the play, with more than 900 wells running production and approximately 1,400 wells in various stages of drilling and completion.
With a current production level of approximately 850 million cubic feet per day (MMcf/d) of natural gas and 140,000 BPD of crude oil and condensate, this emerging South Texas resource play continues to beat industry expectations.
Enterprise Products Partners, a leading master limited partnership, is engaged in a wide range of midstream energy services to producers and consumers of natural gas, NGL, and crude oil. Enterprise’s assets comprise approximately 50,200 miles of onshore and offshore pipelines, 192 million barrels of storage capacity for NGLs, refined products and crude oil, and 27 billion cubic feet of natural gas storage capacity.
Given a broad and vertically integrated asset base, steady cash flow generation ability and financial strength for strategic growth, we believe Enterprise is well positioned to deliver an impressive total return versus its pipeline peers like Kinder Morgan Energy Partners L.P. (KMP) and Enbridge Energy Partners (EEP) going forward.
Enterprise holds a Zacks #3 Rank, which translates to a short-term Hold rating. We are currently maintaining our long-term Neutral recommendation for the partnership.
ENBRIDGE EGY PT (EEP): Free Stock Analysis Report
ENTERPRISE PROD (EPD): Free Stock Analysis Report
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