Enterprise Products Partners LP has taken the first step toward developing a $245 million, 160,000 b/d natural gas liquids pipeline system along the U.S. Gulf Coast.
Enterprise signed a letter of intent to acquire a 263-mile, 10-in. liquids pipe- line extending from Sorrento, La., to Mont Belvieu, Tex. The letter was signed with Concha Chemical Pipeline Co., an affiliate of Shell Oil Co.
Enterprise will acquire Concha`s so-called Lou-Tex pipeline through Entell NGL Services LLC for an undisclosed price. Entell is a 50-50 joint venture of Enterprise and Tejas Natural Gas Liquids LLC, another Shell affiliate. Upon completion of a previously announced NGL alliance between Shell and Enterprise, Entell will become a wholly owned unit of Enterprise, with Tejas taking an equity stake in Enterprise (OGJ, Jan. 11, 1999, p. 38).
The pipeline transports chemical-grade propylene from Sorrento to Mont Belvieu, but Enterprise plans to convert a portion of it into batch service. In this sevice, the pipeline will be able to transport chemical-grade propylene, mixed NGL, or NGL products such as ethane, propane, normal butane, isobutane, and natural gasoline. Batch operation is expected to allow increased capacity utilization, according to Shell Chemical Co. official David Aldous.
Enterprise will also expand capacity of the pipeline to 75,000 b/d from 35,000 b/d. "The Lou-Tex pipeline system will link NGL production and storage facilities with Enterprise`s Mont Belvieu facilities, which serve the biggest refinery and petrochemical markets in the U.S. and global markets through its import-export facilities on the Houston Ship Channel," said Enterprise.
Enterprise will continue to transport propylene in the pipeline for Shell Chemical Co. through a long-term exchange agreement.
Expansion plans
The acquisition of this pipeline is the first step in Enterprise`s plan to develop a larger Gulf Coast NGL pipeline system. "This larger system will strategically link growing supplies of natural gas liquids produced in Louisiana and Mississippi with the principal NGL markets on the U.S. Gulf Coast," said Enterprise. "These markets include Mont Belvieu, South Louisiana, and Southeast states served by Dixie Pipeline."
Enterprise says it is evaluating either constructing or acquiring additional pipelines to complete its planned 160,000 b/d system. It expects to finish the larger system expansion in second half 2000.
Enterprise Pres. and CEO O.S. "Dub" Andras said, "Due to the lack of transportation infrastructure, NGLs produced in Louisiana and Mississippi have limited access to the United States` largest NGL market at Mont Belvieu and therefore have traded at a discount. This imbalance of supply and demand is expected to be exacerbated by increases in Louisiana and Mississippi NGL production associated with deepwater Gulf of Mexico natural gas."
Enterprise expects acquisition of the Lou-Tex pipeline to be completed by the end of the third quarter. Conversion of the system to batch service with 75,000 b/d of capacity will be finished by mid-2000.
