Enterprise cancels Permian crude pipeline

Enterprise Products Partners is cancelling its 450,000 b/d Midland-to-Echo 4 crude pipeline, the latest midstream casualty stemming from the collapse in oil prices and the Covid-19 pandemic.

The pipeline would have expanded Enterprise's system from the Permian basin in west Texas to the Houston area. It was planned to start service in the second half of 2021.

The cancellation will cut capital expenditures by about $800mn through 2022, the company said today.

Enterprise has amended agreements with customers on Midland-to-Echo 4 to use existing pipelines to satisfy commitments. The changes provide a reduction in near term volumes in exchange for extending the timeline of the deals.

US midstream companies have been reducing planned crude pipeline capacity expansions through deferrals or scale-backs after efforts to contain the Covid-19 pandemic pushed the US economy into recession and caused a sharp reduction in global oil demand.

Enterprise is still building a section of another large Permian project in Texas — an ExxonMobil-led 1mn-1.5mn b/d crude and condensate pipeline system. That joint venture project, known as Wink-to-Webster, involves seven companies, including Plains All American Pipeline and Marathon's midstream segment MPLX. The system will move crude from Wink and Midland in the Permian to multiple locations near Houston, including Webster and Baytown, with connectivity to Texas City and Beaumont.

Enterprise also is proposing an offshore terminal off the coast of Freeport, Texas, that could load Very Large Crude Carriers (VLCCs). That project, known as the Sea Port Oil Terminal (SPOT), would include about 80 miles (129km) of 42-inch diameter pipeline to an offshore terminal capable of loading and exporting oil at about 85,000 bl/hour. The SPOT project's federal approval is not expected this year, Enterprise said.

By Eunice Bridges