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Enterprise Products to move forward on NGL expansions in Texas

October 31, 2018

Houston-based Enterprise Products Partners LP (NYSE: EPD) has decided to move forward on two expansions to its natural gas liquids network in Texas.

One is a 40,000-barrel-per-day natural gas processing plant near Midland-Odessa in Loving County, Texas, according to an Oct. 31 press release announcing the start of construction. The plant is meant to enter service in the first quarter of 2020, according to the release.

The Loving County plant will cost about $412 million and employ 10 people paid $65,000 a year, according to a Chapter 313 tax incentive application filed with the Texas comptroller in August. The comptroller has yet to approve the tax incentive, but it has a deadline to make a decision by Dec. 13, said a comptroller spokesman.

The second expansion is another 150,000-barrel-per-day expansion of Enterprise Products’ Mont Belvieu NGL fractionation capacity, according to another Oct. 31 press release. The expansion has an in-service date in the second quarter of 2020. This is the second such expansion the company has recently announced, with the first due online in the first quarter of 2020, according to the release.

Enterprise Products has reached agreements on tax incentives covering two NGL fractionation trains in Mont Belvieu with a capacity of 300,000 barrels per day, with commercial operations starting in the second quarter of 2020. The two trains are expected to cost about $789.7 million total, according to comptroller filings.

The incentives the midstream company is chasing for these expansions are Chapter 313 agreements, in which a company building certain kinds of assets can seek abatements from school districts. The districts can agree to tax only a certain amount of the new asset’s value for a period of 10 years.

Enterprise Products CEO Jim Teague thinks the fractionation market will be tight through 2019, he said on the company’s third-quarter earnings call Oct. 31. It’s managed to support the Mont Belvieu expansions with long-term contracts.

“We are having people come to us and ask for fractionation capacity, and we're looking at the levers that we can pull to accommodate them,” Teague said on the call. “Frankly we like to tie those opportunities to longer-term deals.”

Enterprise Products has plenty of real estate in Mont Belvieu for it to build fractionators as long as the market needs it, Teague said.

Enterprise Products produced $9.59 billion in revenue during the third quarter, according to the company’s third-quarter earnings report. Of that, $1.33 billion was net income, according to the report.