NEW YORK—Enterprise Products Partners LP (NYSE: EPD) said it has filed permits to construct another crude pipeline out of Midland, Texas, in the Permian Basin to Houston after receiving “serious interest” from customers:
“If we’re able to successfully underwrite this third pipeline, we would have a lot of flexibility to convert Midland-to-ECHO 2 back into NGL service should demand support it,” CEO Jim Teague said during an earnings call May 1.
As production surged in the Permian basin, it sparked a flurry of new pipeline projects to keep pace with the rapid growth, causing analysts and traders to say the Permian will have excess takeaway capacity within about a year.
However, Enterprise said there is a dearth of pipelines connecting to Houston, adding that the hub has access to export markets, storage and Gulf Coast refining markets.
“Fact of the matter is we have a decent number of producers who are coming to us, asking us to build another pipeline,” Brent Secrest, Enterprise senior vice president, adding that “essentially all” of the company’s contracts are locked in with 10-year deals.
Costs to build pipelines have risen slightly but Enterprise said it has locked in costs for steel and pipe.
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