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Enterprise Products Partners L.P. Message Board

  • chem_oiler chem_oiler Aug 20, 1999 12:24 PM Flag

    EPL & Shell & Exxon

    Where is this company going? It looks to be
    headed into Shell's clutches and now is hooking up with
    Exxon in LA. IMHO it looks to be that Shell will
    eventually move in and take over the rest of the

    Not to confuse things but this all looks very
    positive for the near term and long term


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    • Ethanol is being pushed by agricultural economic concerns which of course is highly political.

    • Why is the "gasohol" market using grain to
      produce the ethanol additive. Considering cost of
      fertalizers (NH3) and the energy required to produce it, it
      would seem that using ethylene with an acid cat. would
      be a cheaper, and it is certainly a well understood
      process. The economics of ethylene supply would probably
      affect the anwser. However I believe a government
      subsidy would not be required

      MTBE was the subject
      of a 60 minute item last Sunday. It would seem a
      replacement for MTBE is going to be indicated.

    • My thought was to use the facilities currently
      devoted to manufacturing MTBE to synthesize a liquid fuel
      directly marketable in the current distribution system. I
      realize this is not a trivial modification to the
      existing facilities and may not make economic sense. Since
      MTBE is used in sizable quantites (%17) it is a major
      component of gasoline, and the facilities must be large. If
      the reliance on foreign oil is truly an issue and
      since EPD is already making a gasoline component making
      a gasoline from a natural gas feed stock seems

    • The Kernridge and Ventura gas plants in California belong to Aera and not Tejas. Aera is an E&P alliance company owned by Shell and Mobil. Tejas has no California assets.

    • Enron bought an MTBE plant from Tenneco years ago
      for around $600 million when the Clean Air Act regs
      made MTBE look like the best thing around to clean up
      gasoline. They just took a $278 million AFTER TAX writeoff
      on that plant. Why do that if you think it will keep
      running? Texas Eastern Products Co. (TEPPCO) reported
      lower earnings 3Q partly because MTBE shipments were

      MTBE was the growth market for butanes.
      Other than use as petrochemical feedstock, the only
      other things you can do with normal butane is to blend
      directly into gasoline, which would boost vapor pressure
      too much in the summer, or isomerize it into
      isobutane, which is an ingredient in - MTBE. The only
      sizable market for isobutane other than in refinery
      alkylation units, is MTBE. Enterprise is a partner in Mont
      Belvieu Environmental Fuels, which is a 12,0000+ barrel a
      day MTBE plant. Sun was the refinery customer for the
      product. What will they do with it if the government
      outlaws it?

      The good news part is that somebody
      has to get rid of butane produced in gas plants and
      refineries somewhere, and Enterprise has an export terminal
      and pipelines to move it around. But the piece of
      business built on making isobutane and/or splitting
      butanes to feed MTBE production doesn't look as healthy
      now. Also, who knows what kind of lawsuits will come
      out of the whole deal. MTBE has been found in 46
      lakes around Houston already.

      Any business has
      risks. You just need to be aware of what they are so you
      can make an informed decision.

    • Why do you think EPD's butane business is so reliant on the MTBE issue?

    • There has been a lot of research over the years
      around using nat gas as motor fuel, either in fleet
      operations or by converting it to diesel (gas to liquids
      technology, new plant being built in Nigeria by Chevron).
      Enterprise is in the processing and transportation side of
      the nat gas business - think refining and marketing
      in oil companies. Anything that increases end use
      demand for gas should be good for their throughput
      revenue as long as their assets are in the right place,
      but the gas processing (gas refining) side of the
      business could see a margin squeeze if the price of nat
      gas goes up just like refineries get squeezed when
      oil prices run up. Depends on the terms of the 20
      year deal they cut with Tejas when they took over
      operating the Tejas gas plants.

      EPD still seems
      like a good dividend play, but not a big capital gains
      winner - especially with the MTBE issue hanging over
      their butane business.

    • Shell U.S. Exploration & Production didn't want
      to mess with the offshore gas processing and gas
      liquids stuff; they have enough to do drilling wells;
      Enterprise is good at the downstream stuff; this way Shell
      gets a piece of the revenue stream, gets the assets
      and employees off their books, and gets the service
      they need for their gas production. Enterprise and
      Exxon have done business for years in Lousiana; same
      deal - Enterprise runs the facility and Exxon gets
      their product taken care of. Gas liquids are not a core
      business for Exxon either; they need the feedstock for
      chemicals operations but these facilities are expensive to
      run and have a lot of liability exposure. Why keep
      them if someone else will run them for

      Same outlook, different reason - EPD looks good for
      the future because the business is growing; good for
      partnership distributions; this one isn't really a big
      capital gains play but has good yield if you need it.

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