Enterprise acknowledges economic, trade pressures as petrochemical segment tumbles

US midstream company Enterprise Products reported a lower year-over-year gross operating margin for its Petrochemical & Refined Products segment for the second quarter of 2025, as several company executives acknowledged the challenging market conditions impacting their operations.

"Seasonally, the second quarter is always tough," said James Teague, Enterprise's co-CEO and director, during the company's second quarter earnings call on July 28. "But this time, we also face macroeconomic and geopolitical challenges".

The company highlighted an increase in propylene production and associated by-product volumes during the period, compared to the second quarter of 2024, as well as lower turnaround times and increased operation rates for its PDH 1 and PDH 2 facilities, respectively.

However, gross operating margin for the whole Petrochemical & Refined Products segment decreased to $354 million during the quarter, a 9.69% drop year over year.

Randall Fowler, Enterprise's other co-CEO and director, recognized that "petchem is a little soft right now", while showing confidence in its company's footprint and ability to survive the current cycle. At the same time, other executives shared concerns about some recent trade policy decisions that affected the segment's upstream directly.

"You really compromise the U.S. brand for reliable supply and energy security when you just cut off a counterparty like that", said senior vice president of hydrocarbon marketing Michael Hanley, talking about the license requirements the Bureau of Industry and Security (BIS) put to ethane exports to China in June.

Hanley pointed out Enterprise went "largely unscathed" by the requisite. However, he pointed out that a non-Chinese company they were hoping to close an ethane contract with has "since made a decision to contract naphtha, which is supplied globally versus just coming to the U.S. to get ethane. So, from that perspective, it's been disruptive".

James Teague also criticized the BIS' government branch, the Department of Commerce, regarding its approach to trade policy.

"This past quarter was dominated by headlines about tariffs and trade [...] We've been clear about the risk of weaponizing U.S. energy exports. These kinds of actions rarely hurt the intended target and often backfire, hurting our own industry more. We're fortunate this administration understands the importance of energy and global trade, even if the Commerce Department may need a little reminder. Unfortunately, we could face similar challenges in the future".

Room for improvement in PDH rates

Christian Nelly, vice president of finance and sustainability in Enterprise, said operating rates for its propane dehydrogenation units improved compared to the first quarter of 2025. However, he added that "we're still not happy and we haven't met expectations about what our on-stream time should be".

Over June and July, Enterprise reported four separate instances of emission events in their two PDH units, according to filings with the Texas commission on Environmental Quality. Three of them were on its first PDH plant, on June 15, June 30 and July 9, while the fourth happened July 10 on its PDH unit 2. Two of the incidents in PDH unit 1 were caused by failures in the Regen Air Compressor B.

The propylene spot market remained on a downward curve despite the supply disruptions, with Platts, part of S&P Global Energy, assessing prices from 36.25 cents/lb FD US Gulf Coast on June 15, the date of the first event, down to 35 cents/lb by the fourth disruption on July 10.

This trend has continued since, with PGP closing at 34.375 cents/lb on July 29. Market participants have said this is due to the high inventory levels and weak downstream demand.

"It used to be that one PDH unit had issues and prices shot up, but not anymore," said one source.