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Enterprise (EPD) to Build Third Cryogenic Plant in Delaware

Zacks Equity Research

Enterprise Products Partners L.P. EPD intends to build a new cryogenic natural gas processing facility and related natural gas and natural gas liquids (NGL) pipeline infrastructure.

This is intended to support the continued growth of NGL-rich natural gas production in the Delaware Basin of West Texas and southeastern New Mexico. The new plant is projected to have a nameplate capacity of 300 million cubic feet per day (MMcf/d) and the capability to extract over 40,000 barrels per day of NGL. However, the site for the new processing plant has not been decided yet.

The project is secured by long-term commitments from a major producer. The facility is expected to come online in the second quarter of 2018.

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Apart from providing new gas processing capabilities, the project will involve construction of rich natural gas gathering lines, a residue pipeline to Waha and an NGL pipeline to Enterprise Product Partners’ Mid-America Pipeline system. These assets will be added to the rest of the partnership’s Delaware Basin infrastructure.

This project will complement the partnership’s ongoing growth strategy in the region. Notably, this is the third cryogenic natural gas processing plant announced by Enterprise Products Partners in less than 24 months.

The first cryogenic plant – the South Eddy facility – was brought online earlier this year. The second one is the partnership’s joint venture processing plant at Waha, which is expected to be commissioned in the third quarter of 2016. The partnership expects these efforts to augment the processing capacity in the Delaware Basin to 800 MMcf/d from 40 MMcf/d in 2012.

Enterprise Products Partners carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector are CVR Refining, LP CVRR, FutureFuel Corp. FF and ReneSola Ltd. SOL. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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