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Enterprise Products to Proceed With ATEX Expansion Project

Zacks Equity Research

Enterprise Products Partners L.P. EPD recently completed a binding open season to gauge shipping commitments for the proposed 45,000 barrels per day (BPD) expansion of capacity on the Appalachia-to-Texas (“ATEX”) ethane pipeline. The 1,200-mile pipeline induces the development and use of domestic energy in the United Sates.

The partnership intends to proceed with expansion works, which are expected to enable it to transport more ethane from customers in Marcellus and Utica shales in the Appalachian region to the natural gas liquids (NGLs) storage complex in Mont Belvieu, TX. Notably, the 145,000 BPD pipeline provides producers with an access to petrochemical plants located in the Gulf Coast.

Enterprise Products intends to boost the pipeline’s capacity with the help of a combination of pipeline looping and hydraulic improvements. The midstream energy firm is expected to bring modifications to ATEX’s existing infrastructure for increasing transportation capacity, which is expected to come online by 2022.

The partnership expects demand for ethane to rise in the coming years, which validates its move of expansion. Enterprise Products anticipates majority of the demand to come from the domestic market. The new crackers are expected to utilize around 1 million BPD of ethane. With export of ethylene and polythene — major components of chemical and plastic industries — on the rise, the demand for ethane is expected to jump by 2025. As such, the expanded capabilities — which are expected to come into service in 2022 — will prepare the partnership to earn huge profits from NGL transportation services.

Similarly, to earn more profits from rising U.S. crude production, the partnership decided to further expand the Midland to ECHO crude oil pipeline system, earlier this month. Enterprise Products intends to construct a pipeline to link its 6-million-barrel Midland, TX, storage facility to the ECHO Terminal in Houston, TX, through the Eagle Ford system in South Texas. The pipeline is expected to come online in the first half of 2021.

Price Performance

Enterprise has gained 12.2% year to date compared with 6.5% growth recorded by the industry.

Zacks Rank and Stocks to Consider

Enterprise currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Matrix Service Company MTRX, Holly Energy Partners, L.P. HEP and Pembina Pipeline Corp. PBA. While Matrix Service sports a Zacks Rank #1 (Strong Buy), Holly Energy and Pembina hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Matrix Service’s 2019 earnings per share are expected to rise 58.4% year over year.

Holly Energy Partners’ 2019 earnings per share are expected to rise 8.8% year over year.

Pembina’s 2019 earnings per share are expected to rise 21.5% year over year.

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