Enlink Midstream

A key to success for midstream companies developing crude oil gathering systems in the Permian is establishing strong, trusting relationships with the producers driving the region’s growth. Hitch your wagon to one or more producers with top-notch rock and aggressive expansion plans, develop gathering systems that meet their needs for flow assurance and destination optionality, and life will be good. Many of the midstreamers whose Permian gathering systems we’ve been discussing in our ongoing series have done just that. Today, we review the existing and planned systems of EnLink Midstream, another company whose growth is founded in large part on the relationships it has developed with major Permian producers.

For decades, liquidity at the U.S. natural gas benchmark pricing location Henry Hub in Louisiana has been dominated by financial trades, with minimal physical exchange of gas, despite the hub boasting robust physical infrastructure, including ample pipeline connectivity. But that’s changing. Between the start of LNG exports from Cheniere Energy’s Sabine Pass LNG facility in February 2016, and the slew of pipeline reversals that are allowing Marcellus/Utica producers to target the new Gulf Coast demand, gas flows through Henry have been rising. In fact, more physical gas is moving through the hub than in nearly 10 years, to the point where a key pipeline interconnect is at capacity on many days, which historically was unheard of. Today, we begin a short series looking at the changing physical market at Henry.  

The Henry Hub, LA physical interconnect at the center of North American natural gas pricing is about to go through big changes with the in-service of liquefied natural gas (LNG) export terminals as soon as the end of 2015 and growing industrial demand in the Gulf Coast region. These changes are also likely to impact the CME/NYMEX futures contract that is based on delivery at Henry.  To understand how the demand growth nearby will impact Henry Hub cash and futures markets, we must first understand what really goes on physically at Henry. In today’s blog, we dive into the workings of the physical Henry spot market.

While Energy Information Administration (EIA) estimates of crude-by-barge traffic between the Midwest and the Gulf Coast have fallen sharply in the past 18 months, shipments down the Ohio River to Texas and Louisiana refineries have increased threefold – peaking at just under 70 Mb/d in May 2015. Growing barge shipments have been accompanied by midstream investment in barge dock facilities – especially in Ohio. Today we discuss increased shipments of ultra light crude condensate to Gulf Coast refineries on the Ohio River.

Natural gas exports to Mexico are on a tear, and there’s every reason to believe the market will continue to grow. In essence, parts of the Eagle Ford and Permian Basin are becoming the go-to fuel source for new power plants and industrial facilities south of the border, as evidenced by a Howard Energy Partners plan to build new, connecting pipelines to deliver large volumes of gas directly from South Texas to emerging demand centers in and around Monterrey, Mexico. Howard’s also been addressing some of Texas’s gas gathering and processing needs. Today, we consider the latest plan to add gas pipeline capacity across the Rio Grande.

The recent collapse in oil prices has thrown into question the future levels of crude, natural gas and NGL production in, among other places, the Permian Basin and the Eagle Ford. That will lead midstream companies to take a fresh look at the two regions’ existing and planned infrastructure to make sure they still are in line with pipeline, processing and other needs. Today, we conclude our series on the two regions’ natural gas processing plants, NGL pipelines and fractionators with a look at where we stand, and what’s ahead.

The prolific, liquids-rich Permian Basin and Eagle Ford plays have attracted more than a dozen midstream companies interested in meeting the growing need for natural gas processing plants, fractionators and natural gas liquids pipelines. Some of the larger players have assembled broad-based portfolios of assets, while others have focused on more stand-alone NGL pipeline or gas processing investments. Today we begin wrapping up our series on NGL-related assets in two of the nation’s most important shale plays.