Enterprise Products Partners L.P.

SEC Filings

ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018
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Natural gas marketing activities
Our natural gas marketing activities generate revenues from the sale and delivery of natural gas purchased from producers, regional natural gas processing plants and on the open market.  Our natural gas marketing customers include local gas distribution companies and electric generation plants. The results of operations from our natural gas marketing activities are primarily dependent upon the difference, or spread, between natural gas sales prices and the associated purchase and other costs, including those costs attributable to the use of our other assets.  In general, sales prices referenced in the underlying contracts are market-based and may include pricing differentials for factors such as delivery location.

We are exposed to commodity price risk to the extent that we take title to natural gas volumes in connection with our natural gas marketing activities and certain intrastate natural gas transportation contracts.  In addition, we purchase and resell natural gas for certain producers that use our San Juan, Piceance, Permian Basin and Jonah Gathering Systems and certain segments of our Acadian Gas and Texas Intrastate Systems.  Also, several of our natural gas gathering systems, while not providing marketing services, have some exposure to risks related to fluctuations in commodity prices through transportation arrangements with shippers.  For example, nearly all of the transportation revenues generated by our San Juan Gathering System are based on a percentage of a regional natural gas price index.  This index may fluctuate based on a variety of factors, including changes in natural gas supply and consumer demand.  We attempt to mitigate these price risks through the use of commodity derivative instruments.  For a discussion of our commodity hedging program, see Part II, Item 7A of this annual report.

Petrochemical & Refined Products Services Segment

Our Petrochemical & Refined Products Services business segment includes: (i) propylene production facilities, which include our propylene fractionation units and recently completed propane dehydrogenation (“PDH”) facility, approximately 800 miles of pipelines, and associated marketing operations; (ii) a butane isomerization complex and related deisobutanizer (“DIB”) operations; (iii) octane enhancement and high purity isobutylene (“HPIB”) production facilities; (iv) refined products pipelines aggregating approximately 4,100 miles, terminals and associated marketing activities; and (v) marine transportation.

Propylene production and related operations
This business area consists of seven propylene fractionation (or splitter) units, our recently constructed PDH facility, 795 miles of related pipelines, and associated marketing activities.  With the exception of the Lake Charles PGP Pipeline in Louisiana, we operate all of our propylene production assets and related pipelines.

Propylene is a key feedstock used by the petrochemical industry.  There are three grades of propylene; polymer grade (“PGP”) with a minimum purity of 99.5%; chemical grade (“CGP”) with a minimum purity of approximately 93-94%; and refinery grade (“RGP”) with a purity of approximately 70%.  In 2017, the global demand for propylene (PGP and CGP combined) was estimated at 104 million tons.  The PDH facility produces PGP using propane feedstocks.  Propylene fractionation units separate RGP, which is a mixture of propane and propylene, into either PGP or CGP.  The demand for PGP primarily relates to the manufacture of polypropylene, which has a variety of end uses including packaging film, fiber for carpets and upholstery and molded plastic parts for appliances and automotive, houseware and medical products.  CGP is a basic petrochemical used in the manufacturing of plastics, synthetic fibers and foams.

Our recently constructed PDH facility at Mont Belvieu has the capacity to produce up to 1.65 billion pounds per year, or approximately 25 MBPD, of PGP.  At this nameplate production rate, the facility is expected to consume approximately 35 MBPD of propane as feedstock.  The PDH facility is integrated with our legacy Mont Belvieu propylene fractionation units, which provides us with operational reliability and flexibility for both the PDH facility and the fractionation units.  The facility’s construction is underwritten by long-term fee-based contracts that feature minimum volume commitments. We expect the PDH facility to enter full service during the first quarter of 2018.

We have initiated legal proceedings involving the former general contractor for the PDH facility.  For a summary of this litigation, see Note 17 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report.