High pipeline traffic, especially in the NGL sector, led to a strong wrap up of 2023, Enterprise Products Partners (EPD) executives said in the company’s Feb. 1 fourth-quarter earnings call.
“We set nine financial records and 13 operating records in 2023,” said Jim Teague, co-CEO for Houston-based EPD.
For 2023, NGL fractionation volumes averaged 1.6 MMbbl/d, a record high for the company and a 16% increase from 2022. The company also set records for NGL pipeline shipments, ethane exports and NGL marine terminal volumes.
Many of Enterprise’s NGL pipelines draw from the Permian Basin and Rocky Mountain shales. EPD’s operating margin from the partnership’s NGL pipelines and storage business increased $133 million, or 21%, to a record $779 million for fourth-quarter 2023 compared to $646 million for fourth-quarter 2022.
“We have NGLs growing at a faster pace than crude oil,” said Randy Fowler, co-CEO and CFO. “We’re seeing it across our system. Storage is going to become increasingly valuable.”
Despite lower commodity prices and margins for gas processing, EPD reported growth in overall volumes, making up for drops in price. For fourth-quarter 2023, the company’s revenue of $14.62 billion surpassed analysts’ expectations by 16%, or $2.34 billion.
EPD benefited from a 9% increase in total equivalent pipeline volumes with an average of 12.2 MMbbl/d, a 20% increase in marine terminal volumes and a 13% increase in natural gas processing volumes to 5.8 MMcf/d, Teague said.
The company also reported a $15 million increase in operating margins for its octane enhancement facility in Belvieu, Texas, thanks to strong international demand, Teague said.
Waiting on SPOT
Executives also gave an update on the status of the Sea Port Terminal Project (SPOT), which will be the first deepwater, crude export hub offshore Texas. In November 2022, the U.S. Department of Transportation’s Maritime Administration gave the project preliminary approval. Since then, the company has been waiting for the federal government to grant a license.
On Jan. 22, Reuters reported that EPD expected a license in first-quarter 2024. The terminal near Freeport, Texas, will connect to onshore crude storage facilities and could load Very Large Crude Carriers as fast as 85,000 bbl/hour.
“We have completed all the requirements to receive the license. We’re in constant contact with MIRAD (DOT Maritime Administration),” said Robert Sanders, executive vice president of asset optimization. “As a matter of fact, we have seen a draft of the license, which they asked us to comment on, which we've commented on, and they’ve accepted our changes.”
“Everything is basically done. We’re just waiting on knowledge that we've got the license.”
Enterprise is partnered with Enbridge on the project and signed Chevron as its anchor customer. EPD expects the building process for SPOT to take three years.
The meeting also marked the retirement of Randy Burkhalter, vice president of investor relations, after a 46-year career in the energy industry.
“We are grateful for Randy's service, his integrity, his attention to customer service and his industry-renowned social prowess,” Fowler said.
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