Enterprise Products Partners L.P.

SEC Filings

10-K
ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018
Entire Document
 


We believe that our marine terminal assets and related infrastructure –storage and pipelines- are strategically located on the U.S. Gulf Coast to take advantage of the shift mentioned above: growing production resulting in reduced crude oil imports and higher exports of crude oil and refined products.  These assets could benefit from concurrent imports and exports of various grades of crude oil as (i) refineries optimize their crude oil input slate, (ii) trading companies import and export different grades of crude oil depending on global and regional supply-demand factors, and (iii) producers optimize their production depending on market price signals.

Enterprise has significant crude oil export capabilities on the Houston Ship Channel and at Beaumont, Freeport and Texas City. Towards the end of 2017, we began limited service on the Midland-to-ECHO crude oil pipeline which will complement our existing assets and allow for the transportation, storage and export of segregated barrels, thus maintaining and assuring the quality and grade of the final product. This is in contrast to an operation relying on mixed streams of various oil qualities and grades. However, this outlook could be muted if there is a prolonged decline in domestic crude oil production or if overseas crude markets become oversupplied for an extended period.

We expect demand for ethane to grow further as several new world-scale ethylene plants begin operations in the U.S. through the early 2020s, which in turn could drive upstream NGL production increases.  We also expect continued increase in global demand for heavier NGLs (butanes and natural gasoline) supported by rising global economic activity.  With respect to natural gas demand, we expect it to continue to increase in the form of U.S. power generation demand, growing industrial demand, exports to Mexico and as LNG.  We believe U.S. producers can provide ample supplies of natural gas at very competitive prices to meet growing global demand.

In recent years, U.S. natural gas and NGLs developed a feedstock price advantage over more costly crude oil derivatives (such as naphtha and gasoil).  In general, we expect this trend to continue due to: (i) competitive domestic production from low risk, short lead time shale resource plays; (ii) the ability of U.S. producers and their suppliers to harness technology to keep costs down; (iii) anticipated long-term increases in demand for crude oil by developing economies; and (iv) ongoing geopolitical risks and poor rule of law in many countries that are major exporters of crude oil.  These advantages lend themselves to a variety of long-term demand-side opportunities, including higher demand from the U.S. petrochemical industry and increased exports of various hydrocarbons (e.g., LNG, LPG, ethane and crude oil).

We also believe the trend in the feedstock price advantage of domestically-produced NGLs and their abundance has led to a long-term fundamental change in feedstock selection by the U.S. petrochemical industry, which is the largest consumer of domestic NGLs.  In order to capitalize on this cost advantage, U.S. petrochemical companies have maximized their consumption of domestic NGLs.  Many of these companies are investing billions of dollars to construct world-scale ethylene plants on the Gulf Coast that are designed to consume NGLs (particularly ethane) as feedstock.  U.S. ethylene production capacity is expected to increase by over 40% between 2016 and 2020.

Below is a list of ethylene plants that either have been recently completed or are under construction and expected to begin operations over the next few years based on publicly available information.

Company
Ethylene
Production
Capacity
Potential
Ethane
Consumption
Estimated
Completion
Date
 
(Billion lbs/yr)
(MBPD)
 
Occidental Chemical/Mexichem
1.2
40
Operational
Dow Chemical
3.3
90
Operational
Chevron Phillips Chemical
3.3
90
1Q 2018
ExxonMobil Chemical
3.3
90
1Q 2018
Indorama
1.1
30
2018
Shintech
1.1
30
2018
Sasol
3.3
90
2018
Formosa Plastics
3.5
95
2019
Axiall/Lotte
2.2
60
2019
Total Petrochemicals & Refining
2.2
60
Early 2020s
Shell
3.5
95
Early 2020s
Total
28.0
770
 

 
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