Enterprise Products CEO: 'Worst Part of the Cycle Is Behind Us'

Researched by Industrial Info Resources (Sugar Land, Texas)--On Monday, midstream operator Enterprise Products Partners LP (NYSE:EPD) (Houston, Texas) reported fourth-quarter 2016 net income of $670 million, compared to $694 million in the fourth quarter of 2015. In a conference call regarding the earnings, Chief Executive Officer Jim Teague discussed the company's capital growth and his optimism for 2017. Industrial Info is tracking more than $4 billion in projects involving Enterprise Products Partners.

Also on Monday, the company announced a new planned project at its facility in Mont Belvieu, Texas: an isobutane dehydrogenation unit. The facility will have a production capacity of 425,000 tons per year of isobutylene.

In remarks that discussed both past and future projects, Teague said, "In the area of growth projects in 2016, we successfully completed $2.2 billion of projects, including two new (cryogenic) plants in the Delaware Basin and our ethane export terminal on the (Houston) Ship Channel." The company launched its first shipment of ethane from its facility in Morgan's Point, Texas, in late August last year. For additional information, see September 6, 2017, article - Ethane Exports Mean Big Business in U.S..

"In addition," continued Teague, "we were successful in developing organic growth projects throughout this part of the cycle. Including our isobutene dehydrogenation, or IBDH, project that we announced this morning, we now have approximately $6.7 billion of growth capital projects under construction that will be completed between now and 2019. Our largest project, the PDH (propane dehydrogenation) at our Mont Belvieu complex, is expected to begin commercial operations mid-year."

The PDH project began construction in mid-2014 and will produce 1.65 billion pounds per year of propylene, using 35,000 barrels per day (BBL/d) of propane as feedstock. Chicago Bridge & Iron Company NV (NYSE:CBI) (The Hague, Netherlands) is fabricating pipe for the project, while Amec Foster Wheeler plc (NYSE:AMFW) (London, England) is acting as engineering, procurement and construction (EPC) company on the project.

In discussing the future, Teague expressed optimism about what the Trump administration might bring to the table for the midstream sector. "We look forward to a more pro-business environment and less regulation," said Teague, who also discussed the upturn in oil and gas prices. "As to prices, it's amazing the difference one year makes. Last year at this time, oil prices were $30 and headed south, and the virtually no-winner natural gas was $2. In this environment, most producers were hesitant to even publish a budget and would only say that were going to try to live within their cash flow. Today, industry sentiment is 180 degrees from where it was this time last year. Crude oil, natural gas and NGL (natural gas liquids) prices have recovered substantially," said Teague.

"We believe the news is especially good for U.S. oil and gas. ...While we expect that 2017 will have its challenges, especially in the first half, we believe the worst part of the cycle is behind us. During the course of this downturn, having to perform in the hard times sharpens your focus to reap even more benefits in the good times."

Among the other Enterprise Products projects being tracked by Industrial Info is the $575 million grassroot crude oil pipeline from Midland, Texas, to Rancho Sealy, Texas. The project includes constructing 416 miles of pipeline to transport 540,000 BBL/d of crude oil from the Permian Basin to Enterprise's Sealy station. The project is planned to kick off this summer and will take approximately a year to complete.

Also under construction is another cryogenic natural gas processing unit in the Delaware Basin area of Texas. The plant will process up to 300 million standard cubic feet per day of natural gas and 40,000 BBL/d of natural gas liquids. Construction began late last year and is expected to be completed in spring of 2018. Optimized Process Design LLC (Katy, Texas) is acting as the EPC firm on the project.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.