Enterprise delays frac project but eyes storage

OREANDA-NEWS. Enterprise Products Partners will delay the start-up of its latest Mont Belvieu, Texas, fractionator project, but says the downturn in crude prices will not impact its organic growth.

Enterprise is eyeing growth in storage projects, particularly on its newly acquired Houston Ship Channel site as part of the Oiltanking Partners deal, but it will delay commissioning its ninth fractionator at its Mont Belvieu, Texas, hub. The fractionator was previously planned for a 2016 start-up but the company did not say how long that would be put off.

The midstream operator expects to close its acquisition of Oiltanking Partners on 13 February. Enterprise chief operating officer Jim Teague said today the acquisition was fundamentally an LPG-driven move, but also a move to gain have a Houston Ship Channel presence.

The partnership's 7.5mn bl/month LPG export facility in the Houston Ship Channel is completely housed at Oiltanking. The facility's capacity will more than double by the end of this year.

"This business is running to a significant part of our value chain and is key to our strategy, and frankly, one where we felt it important to have control over our own destiny," Teague said.

One of the few new growth projects brought to light for 2015 is the move to add storage capacity at the Oiltanking site. Teague says the lower prices have not led the company to hesitate in moving forward on organic build-outs within the Oiltanking assets. The 58-acre site Enterprise received as a result of the acquisition will be used to build additional storage tankage.

One of Enterprise's newer projects, the long-haul Appalachia-to-Texas ethane pipeline, ruptured early this week in Brooke County, West Virginia. The upset has shut-in connectivity to two plants, but had marginal to no impact on ethane supplies shipped to Mont Belvieu. Enterprise said it is currently working with regulatory officials to determine the cause of the rupture, and it will be two weeks before operations resume fully.

Enterprise said it doesn't feel the recent swings in profitability for cracking ethane will have material impacts on its plans to build out a large-scale ethane export terminal at Morgan's Point, Texas. Margins for utilizing heavier feedstocks such as naphtha, butane and propane to make ethylene, have moved above ethane since the beginning of the fourth quarter. This has brought on questions for the feasibility of ethane-only ethylene cracker projects planned for the Gulf coast and beyond in international markets.

Ethane-derived ethylene margins now stand at 35?/lb in Enterprise's view. According to Argus data, margins for producing ethylene with ethane averaged 39.45?/lb, but have since tanked to 21.92?/USG.

The fourth quarter saw growth in transported and fractionated volumes of NGLs for Enterprise. Transported volumes grew by 30,000 bl to 2.94mn bl, while fractionated volumes were up 7pc to 837,000 bl. Propylene fractionation volumes declined 1,000 b/d to 81,000 b/d.