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Enterprise adds new capacity on Midland-to-Sealy Permian pipeline

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Enterprise adds new capacity on Midland-to-Sealy Permian pipeline


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Enterprise Products will add an additional 35,000 b/d of new capacity to its Midland to Sealy, Texas, crude pipeline in May, taking its total throughput to 575,000 b/d, the company said Monday.

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The new volumes have already been subscribed under long-term deals, Enterprise said.

Separately, Enterprise in July will complete a 143-mile pipeline gathering system in the Permian's Delaware Basin that will help producers move over 300,000 b/d of crude and condensate to Enterprise's Midland terminal, also in the Permian.

The project is supported by long-term shipper commitments, spokesman Rick Rainey said in an email.

The Midland terminal has about 1.4 million barrels of storage capacity, he said.

Crude and condensate barrels from the gathering system will likely move on trucks and other pipelines, rather than the Midland to Sealy pipeline, due to different origination points, Rainey said.

"The gathering system is not additive to the Midland to Sealy downstream capacity," he said.

The 416-mile Midland to Sealy pipeline was started up in early 2018 at an initial rate of 300,000 b/d, and is now in full service with a capacity of 540,000 b/d, delivering multiple grades of crude oil from the Permian Basin to the Houston Ship Channel, Enterprise said. The line is shipping WTI, light WTI, West Texas Sour and condensate.

Enterprise's announcement Monday comes at a time when midstream companies are struggling to keep up with the growth in Permian crude production.

Pipeline capacity is currently constrained out of the Permian, reflected in wide price discounts for Midland WTI crude. Midland WTI is averaging at a $4.33/b discount to Cushing WTI so far in April, compared to a 93 cents/b premium in January, S&P Global Platts data shows.

WTI Midland moved higher on the news of additional takeaway capacity Monday. WTI Midland was assessed at a $3.70/b discount to Cushing WTI, up 35 cents/b on the day.

S&P Global Platts Analytics is projecting crude oil output in the Permian to reach 5.266 million b/d by 2020, compared with 3.657 million b/d in 2018.

Several other pipeline projects plan to offer new Permian takeaway capacity by late 2020.

For instance, Magellan is planning to add 40,000 b/d of capacity by early 2019 to its BridgeTex line, which runs from the Permian to the Houston Ship Channel. That will be followed by the EPIC pipeline, which is expected to move 440,000 b/d of Permian crude by mid-2019.

--Ashok Dutta, Mary Hogan,

--Edited by Jeff Mower,