EPP adding Permian processing to support production growth

Enterprise Products Partners LP is progressing with expansions of its cryogenic natural gas processing operations in Delaware and Midland subbasins of the Permian basin.

The proposed capacity additions come as part of the operator’s plan to further support ongoing production growth of crude oil, natural gas, and NGLs in the region.

Alongside reviewing Enterprise’s currently planned projects to bolster Permian gas processing, this article provides an overview of the operator’s existing regional capacity, including updates on recently completed expansions in the basin.

Growth projects

With all of Enterprise’s existing gas plants in the Delaware and Midland basins supported by long-term producer dedications and minimum-volume commitments from legacy and new customers, projections for continued growth in Permian hydrocarbon production have prompted the operator to sustain investments in capacity-building projects across its regional system.

In April 2024, Enterprise revealed it will add a second gas plant to its Delaware-basin Mentone West operations in Loving County, Tex. The proposed Mentone West 2 plant will be equipped to process more than 300 MMcfd of natural gas and extract more than 40,000 b/d of NGLs upon planned startup in second-quarter 2026.

Commissioning of the Mentone West 2 plant will follow start of operations at the Mentone West 1 gas plant—formerly known as Mentone 4—that, now under construction, will also have capacity to process 300 MMcfd of natural gas and extract more than 40,000 b/d of NGLs once online in second-half 2025.

Following completion of the Mentone West 1 and 2 projects, Enterprise said its Delaware basin system will be able to process and extract more than 2.8 bcfd and 370,000 b/d of natural gas and NGLs, respectively.

In Midland basin, Enterprise informed investors in late-April 2024 that construction of its 300-MMcfd Orion gas plant in Midland County, Tex., is proceeding as planned. The plant, which will also be capable of extracting more than 40,000 b/d of NGLs, remains on schedule for targeted startup in second-half 2025.

Upon commissioning of the Orion plant, Enterprise said it will have capacity to process 1.9 bcfd of gas and extract more than 270,000 b/d of NGLs across the Midland basin system.

Table 1 shows Enterprise’s gas plant projects on track to enter service through second-half 2026.

Recent expansions

Enterprise’s upcoming expansions to its Permian gas processing system come amid a series of recently completed capacity growth projects in the region, including two new plant startups that occurred in early 2024.

In the Delaware basin, Enterprise commissioned its 300-MMcfd Mentone 3 gas processing plant—which is equipped with an NGL-extraction capacity of more than 40,000 b/d—in Loving County, Tex., late in first-quarter 2024.

In early April 2024, the operator also informed investors that its Midland basin operations gained an additional 300 MMcfd of gas processing capacity near the end of the first quarter with startup of the Leonidas plant in Midland County, Tex. (Fig. 1).

Also equipped to extract more than 40,000 b/d of NGLs and preceded by startup of the 300-MMcfd Poseidon plant in Glasscock County, Tex., in July 2023, the Leonidas plant became the operator’s seventh gas plant in Midland basin and the sixteenth of its Permian-wide gas processing system (Table 2).

In the operator’s first-quarter 2024 earnings call, Natalie Gayden—Enterprise’s senior vice-president of natural gas assets—said that, as of Apr. 30, 2024, the company’s total Permian gas processing capacity of 3.65 bcfd was more than 91% full.

Outlook

Despite recently weaker natural gas prices, Enterprise told investors it does not expect regional production in the Permian basin to slow down any time soon.

“If you look at what drives the economics of [Permian] producers, it’s not natural gas,” Anthony Chovanec—Enterprise’s executive vice-president of fundamentals and commodity risk assessment—said in the company’s first-quarter 2024 earnings call.

“Natural gas prices [aren’t] going to cause [producers] to shut in or even throttle back oil-related natural gas at this point,” Chovanec said, noting that rig counts in the Permian basin have remained steady since the beginning of 2024.

In its latest investor update published on Apr. 3, 2024, Enterprise estimated annual average crude oil, natural gas, and NGL production from the Permian—which accounts for more than 90% of overall US production growth—would reach 7.5 million b/d, 28.9 bcfd, and 3.8 million b/d, respectively, by 2030.

As of Apr. 30, 2024, Enterprise said it had increased its overall investment in major growth projects under construction across its businesses to $6.9 billion from $6.5 billion on Apr. 3, 2024. The $400-million increase is a result of gathering and related projects to support new dedications and gas plants specifically in the Permian, according to the operator’s latest presentation to investors.

Without specifying Permian-related expenditures, the operator said it expects organic-growth capital investments in a range of $3.25-3.75 billion across its business in 2024-25, with sustaining capital expenditures in 2024 anticipated at about $550 million.