Deon Daughtery, editor-in-chief, Hart Energy: EnLink Midstream has a unique growth strategy for the next five years in which carbon capture will account for 25% of the upside. We're here in Dallas with CEO Jesse Arenivas to tell us more about how this process will work. I'm Deon Daughtery, editor-in-chief of Oil and Gas Investor, and this is the OGInterview. As I know, the energy industry is abuzz with the energy transition, and I've talked to many people, and then I understand that you as well feel like it's not so much a transition as it is maybe a transformation.
Jesse Arenivas, CEO, Enlink Midstream: Yeah, that's correct. You know, we here at EnLink are making ourselves more innovative, more efficient, and we are setting ourselves up to play a key role in a long-term, sustainable strategy of providing the energy the world needs. We have existing infrastructure in the ground along the industrial Mississippi River Corridor, which currently emits 80 million metric tons per annum. Enverus, a third-party research firm estimates at 50 of that 80 is economic today. So, the trifecta is what we like to refer to as high concentration of emissions, nearby, high-quality geologic sequestration and pipe in the ground. That's the competitive advantage that EnLink brings to the table.
DD: But this doesn’t mean that you’re moving away from traditional oil and gas?
JA: No, this is really just a unique growth opportunity for us. 90% of our business today moves natural gas and natural gas liquids, and we see as the industrial demand continues to grow as well as LNG and world demand for LNG grows, we're uniquely situated to do both.
DD: So, your strategy is resonating, then, with the generalists, many of whom left the space within the last five years?
JA: Yeah, I think it is. I mean, we truly have a differentiated story. You know, we have a base business that contributes $1.355 billion in our midpoint for 2023 in a traditional hydrocarbon midstream space with a great opportunity of about 25% growth rate on top of that in the energy transformation space. So, very compelling story, a very interesting way to play the midstream space.
DD: Where do you see growth happening in the industry? Is it international? Is it offshore, or is it, you know, more onshore shale plays?
JA: Broadly speaking, if you look at the gas macro worldwide, the demand for natural gas is as high as it's ever been and growing. We feel very well positioned in the basins we're in, obviously the Permian's an associated gas play, so that's our largest segment and it's had robust growth over the last few years, and we anticipate that'll continue. Now, longer term as LNG takeaway comes online and we feel very well positioned in all the basins we're in. We believe Oklahoma and North Texas will play a vital role in meeting that incremental demand worldwide.
DD: Tell me about EnLink’s first-mover role in CCS.
JA: We signed a landmark deal with CF Industries and Exxon Mobil late last year, in which we will be repurposing a hundred miles of pipe. The total project's a hundred miles. We are going to repurpose 70% of that in an existing 36 inch diameter pipeline. We will then construct a new high pressure dense phase pipeline for the last 30% of that, and that will take CF Industries’ current emissions, and we will transport those to Exxon Mobil's permanent sequestration facilities a hundred miles away on Pecan Island, which is their sequestration site.
DD: And how do you view CCS impacting, benefiting the industry? And then what are the opportunities that it will present to the nation as a whole?
JA: The oil and gas industry has a long history of innovation and problem solving. If you look at the past 20 years, GDP is up 60%, natural gas production's up 90%. U.S. population is up over 12%, yet we have a reduction in CO2 emissions of about 19%. So, that's innovation. The oil and gas industry will facilitate lowering CO2 emissions in the industrial sectors by capturing, transporting and sequestering carbon. So, a perfect example of that is our first mover advantage that we have with ExxonMobil and CF industries. So, the oil and gas industry will benefit from the nation's perspective. It provides economic prosperity, so it will maintain and grow jobs. It will provide energy security not only to the U.S. but to our allies abroad, which will create a more stable global environment. So multiple benefits in the oil and gas industry will lead the way as it always does.
2023-11-20 - Along with NGL and oil pipelines and gas processing, Stephen Lipscomb, partner at Tailwater Capital, says the firm wants to bring a “full suite” of water services to the play.
2023-11-15 - Reading between the lines of midstream management's third-quarter commentary, executives had plenty to say about dividends, M&A and misjudged opportunities.
2023-11-14 - Pipeline company M&A continues as Lower 48 production soars while midstream companies also hiked dividends despite weak commodity prices.
2023-11-13 - TC Energy reported that its Canadian Coastal GasLink pipeline is mechanically complete, ahead of the company’s December target.
2023-11-10 - Owned by the federal government, Trans Mountain is targeting the start-up of the TMX expansion in first-quarter 2024.