Energy Transfer's Permian-to-Gulf Coast Pipeline Picks Up Customers

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Researched by Industrial Info Resources (Sugar Land, Texas)--Energy Transfer Partners LP (ETP) (NYSE:ETP) (Dallas, Texas) is among the companies rushing to answer desperate cries from the Permian Basin for more takeaway capacity. The company's Permian Gulf Coast (PGC) Pipeline has quickly become a popular idea, and earlier this week received sufficient commitments to proceed with construction. Industrial Info is tracking nearly $29 billion in active Oil & Gas Pipeline projects in Texas.

With output in the Permian rising to more than 3 million barrels per day (BBL/d) from about 1.5 million BBL/d four years ago, producers may be forced to slow down if more pipelines are not built. Existing lines are reaching full capacity, and other transportation options (such as trucks) have been less effective. For more information, see June 20, 2018, article - Consultant: Lack of Permian Pipeline Capacity will Force Production Curtailments.

Click on the image at right for a graph detailing the top 10 counties in Texas for Oil & Gas Pipeline projects, by total investment value.

ETP's $500 million PGC Pipeline is expected to transport 600,000 BBL/d of crude oil from the Permian Basin in Midland, Texas, to the company's terminal in Nederland, Texas, and another near the Houston Ship Channel. Magellan Midstream Partners LP (NYSE:MMP) (Tulsa, Oklahoma), MPLX LP (NYSE:MPLX) (Findlay, Ohio) and Delek US Holdings Incorporated (NYSE:DK) (Netanya, Israel) are the partners in the project. For more information, see Industrial Info's project report.

ETP and its partners did not specify which customers had committed to receive product from the PGC Pipeline, but they confirmed that confirmed that enough agreements were in place to economically justify the project. The planned 30-inch-diameter line can be widened to as much as 36 inches if necessary, based on any further commitments from another open season later this week.

Magellan's East Houston Terminal will be the second end point for the pipeline. The terminal is undergoing $20 million in tank additions that will add at least 470,000 barrels of capacity to the current 4 million barrels. For more information, see Industrial Info's project report.

In addition, ETP, through subsidiary Sunoco Logistics Partners LP, is planning an estimated $75 million crude oil terminal in Midland, which would store about 600,000 barrels in one or two storage tanks to support the pipeline. Proposals for a new, $50 million pump station in Goldthwaite and $50 million in pump station additions in Midland are being evaluated; as currently envisioned, the pipeline, terminal and pump station projects are set to wrap up in second-quarter 2020. For more information, see Industrial Info's reports on the terminal, Goldthwaite pump station and Midland pump station.

Later this year, ETP expects to bring online the final 50,000-BBL/d phase of its Permian Express III pipeline expansion in Texas, which includes $30 million in pump station additions in Garden City and a $15 million in pump unit addition in Corsicana. Tom Long, the chief financial officer of ETP, said in a recent earnings-related conference call that the company recently completed an open season for the new capacity. For more information, see Industrial Info's reports on the Garden City and Corsicana projects.

ETP also is considering an unrelated expansion at its facilities in Nederland: an estimated $300 million ethylene export terminal that would export up to 800,000 metric tons per year of ethylene. The facility would be connected to ETP's storage caverns in Mont Belvieu, Texas. For more information, see Industrial Info's project report.

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