Enterprise to Build Up Delaware Basin Portfolio

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--U.S. pipeline company Enterprise Products Partners (NYSE:EPD) (Houston, Texas) said Thursday it put $950 million on the table to acquire Pinon Midstream (Houston), which holds considerable assets in the lucrative Permian Basin.

A.J. "Jim" Teague, the co-chief executive officer at the general partner controlling Enterprise, said the assets advance the company's position into the Delaware Basin, part of the Permian, by at least three years.

"We believe the Piñon management team has developed the premier sour natural gas treating system in the Delaware Basin," he said. "These assets are highly complementary to our midstream energy system and provide us an excellent entry point into the eastern flank of the Delaware Basin for us to expand our natural gas processing footprint."

Pinon's portfolio includes 50 miles of gas gathering and redelivery pipelines, and five compressor stations. Enterprise, for its part, estimates the Delaware Basin assets could support as many as 7,500 new wells, though drilling has been restricted due to a lack of treatment facilities.

Pinon, however, can treat some 270 million cubic feet of natural gas per day and could nearly double that by the second half of 2025.

The Permian is the largest inland crude oil producer and the second-largest natural gas producer in the United States.

Based on data from the U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, the broader Permian is also the most active in terms of wells. Those wells are also becoming more efficient as drillers go longer and deeper.

EIA data show newly-completed wells in the Permian were producing around 433,000 barrels of oil per day (BBL/d) during July. Natural gas production was around 780 million cubic feet per day.

The natural gas that's associated with oil in the Permian is also expected to grow by 8 billion cubic feet per day (Bcf/d) by 2030. Shane Mullins, Industrial Info's vice president of energy products and project development, said in June that the Permian is indeed getting gassier.

"Permian Basin oil production is still growing, just not at the pace it did in previous years," Mullins said. "Combine that with the fact that the area's gas-to-oil ratio is increasing, and you clearly see that natural gas takeaway capacity must continue to grow, even if crude production slows down somewhat."

For Enterprise, the new natural gas assets from Pinon will provide new choices for producers in the region.

Enterprise in its second quarter earnings report said that it piped some 7.7 million barrels of oil equivalent per day in natural gas liquids, crude oil, refined products and other petrochemicals over the three-month period ending June 30, an 8.4% increase over the same period in 2023.

The company reported net income attributable to common shareholders of $1.4 billion during the second quarter, a 12% increase over year-ago levels. That bucks something of a trend in a sector bruised by lower commodity prices.

West Texas Intermediate, the U.S. benchmark for the price of oil, was trading at around $73 per barrel on Thursday, compared with $80 per barrel at this time last year. Henry Hub, the U.S. benchmark for natural gas, was trading about 20% lower than year-ago levels at $2.04 per million British thermal units.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).