Houston-based Enterprise said Wednesday in a statement that it amended accords with customers, allowing the company to use existing pipelines to support its crude oil transportation agreements. The cancellation will save about $800 million of capital expenditures through 2022. Enterprise expects to take an impairment charge related to the decision of approximately $45 million in the third quarter.
Cost savings “will accelerate Enterprise toward being discretionary free cash flow positive, which would give us the flexibility to reduce debt and return additional capital to our partners, including through buybacks,” Co-Chief Executive Officer Jim Teague said in the statement.
|Projects at a Glance|
|Project||Operator||Capacity (‘000 b/d)||Route||Start Time|
|Midland-to-ECHO 3||Enterprise Products Partners||450||Midland-ECHO, southeast Texas||3Q 2020|
|Wink to Webster||ExxonMobil||1,000||Wink, Texas-Webster, Texas||1H 2021|
|Seahorse||Tallgrass Energy||800||Cushing, Oklahoma-Louisiana||3Q 2021|
|Swordfish||Crimson Midstream||600||Louisiana-LOOP||1H 2020|
|Voyager Pipeline||Magellan, Navigator Energy||250||Oklahoma to Texas||On Hold|
|Red Oak Pipeline||Phillips 66||400||Oklahoma to Texas||Deferred|
|Red River Pipeline||Plains, Delek||85||Oklahoma to Texas||2020|
|Ted Collins Pipeline||Energy Transfer||225||Nederland||4Q 2020|
|Dakota Access Expansion||Energy Transfer||500||Illinois||2021|
Still, even before the global outbreak, the Permian was headed for an overbuilding of capacity, Murphy said. Enterprise’s Midland-to-Echo 3 will add 450,000 barrels a day and the Wink-to-Webster project will add 1 million barrels. “There is no way production growth would have filled all the available pipelines and the new ones,” she said.
Prior to this project cancellation, at the onset of the outbreak in March, Phillips 66 deferred its Red Oak and Liberty crude pipelines projects while holding off on its final investment decision for its ACE pipeline.