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A must-know guide to Energy Transfer Partners’ Permian assets

Avik Chowdhury

Rising production benefits midstream MLPs in the Permian Basin (Part 8 of 8)

(Continued from Part 7)

Energy Transfer Partners’ assets in the Permian

Energy Transfer Partners LP (ETP) is engaged in the natural gas midstream and intrastate transportation and storage businesses in the United States. The company’s Midstream segment gathers, compresses, treats, blends, processes, and markets natural gas in the major basins and shales in the U.S., including the Permian Basin in West Texas. ETP has approximately 7,800 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas.

ETP’s NGL assets in the Permian

The company’s Western Texas segment, owned by Lone Star, operates NGL (natural gas liquids) pipelines, primarily transporting NGLs from the Permian and Delaware basins and the Barnett and Eagle Ford Shales to the storage facility in Mont Belvieu, Texas. The 1,070-mile-long pipelines have the capacity to transport 137,000 barrels per day. ETP has a 70% interest in Lone Star.

The other pipeline system, the West Texas Gateway pipeline, has capacity to transport 209,000 barrels per day of NGLs. This interstate pipeline is 570 miles long. Operated by Lone Star, the system began operation from December 2012 and connects Permian and Delaware Basins and the Eagle Ford Shale to Mont Belvieu, Texas.

ETP’s crude oil assets in the Permian

The company also operates crude oil operations in the Permian Basin, including crude oil transportation through Sunoco Logistics (SXL). As of December 31, 2013, ETP has a 2% general partner interest and 32% limited partner interests in SXL.

ETP management’s views

Commenting on the prospect of ETP’s operations in the Permian Basin , Martin Salinas, the chief financial officer of ETP, said, “We are moving forward and expanding the plant, taking in from 130,000 Mcf a day we originally announced to 180,000 a day, given the significant demand we’re seeing for processing capacity out of the Permian basin. And we’re excited about the prospects for further expansion as producers ramp up their drilling programs in the region. As we look at the landscape of our industry, we see tremendous opportunities in the natural gas market and we believe Energy Transfer is well positioned to address North America’s need for more natural gas infrastructure. We see expansion opportunities in the areas of pipeline conversion and repurposing opportunities as well as growth in the Eagle Ford and Permian areas.”

Midstream Permian companies

The midstream energy companies that engage in the transportation and logistics of crude oil and natural gas have been very active for the past five years as a result of increasing production in the Permian Basin. The master limited partnerships in the midstream space that have benefited the most from the shale boom include Enterprise Products Partners LP (EPD), Sunoco Logistics Partners LP (SXL), Magellan Midstream Partners (MMP), and Energy Transfer Partners (ETP). These are components of the Alerian MLP ETF (AMLP).

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