Joint Venture

The U.S. may be in a monthslong pause in approving new LNG exports but that doesn’t change the fact that U.S. LNG export capacity will nearly double over the next four years, that most of the new liquefaction plants are being built along the Texas coast, and that their primary source of natural gas will be the Permian Basin. That helps to explain why three big midstream players — WhiteWater/I Squared, MPLX and Enbridge — recently formed a joint venture (JV) to develop, build, own and operate gas pipeline and storage assets that link the Permian to existing and planned LNG export terminals. In today’s RBN blog, we examine the new JV and discuss the ongoing development of midstream networks for crude oil, natural gas and NGLs. 

The massive energy-industry dislocations caused by the COVID-19 pandemic forced every upstream, midstream, and downstream player to consider what it all meant for them and what they could and should do to weather the storm. A common theme emerged: management needed to delay or even jettison their plans for growth and instead focus on efficiency by cutting costs, working to maximize the revenue from every molecule, and seeking out opportunities to streamline and optimize their operations. A prime example of this push for efficiency came last week with the announcement by Plains All American and Oryx Midstream that each will contribute assets to a new, Plains-operated crude oil pipeline joint venture in the heart of the Permian’s Delaware Basin. Today, we review the plan and its rationale.

By Q2 of 2015, the Plains and Enterprise joint venture pipeline in the Eagle Ford will carry up to 470 Mb/d of crude and condensate to market in Houston and Corpus Christi including barrels shipped from the Permian Basin on the Cactus pipeline. This pipeline expansion will easily make the two-midstream operators the largest players in the Eagle Ford market. On top of that, Enterprise already has a leg up in the race to crank up condensate exports – having recently won one of the coveted BIS letters. Today we describe recent expansions in these two company’s Eagle Ford networks.