Energy infrastructure giant Enterprise Products Partners said it will build a 571-mile pipeline from the Permian Basin to the Houston area to transport natural gas liquids.
The new pipeline project is another sign that West Texas is booming again with oil and gas and the Houston area is growing as the hub for those resources to either be processed or exported. Oil gets all of the attention, but the natural gas streams from the shale rock are used to create petrochemicals, electricity or other products.
Houston-based Enterprise said the planned Shin Oak NGL pipeline will start northwest of Midland in Gains County and end at its Mont Belvieu complex, where Enterprise can separate the natural gas liquids into products like ethane, propane and butane. Ethane is the primary feedstock of the Gulf Coast’s growing petrochemical sector.
“The Permian Basin is currently the hottest play in North America and is expected to continue its strong growth for years to come,” said Enterprise CEO Jim Teague in a prepared statement. “This additional pipeline takeaway capacity to Mont Belvieu will provide Permian producers the flow assurance they need to continue the unfettered development of their reserves with confidence.”
Teague is emphasizing such pipelines will ensure surging oil and gas production in West Texas won’t create bottlenecks without enough pipeline capacity to move the growing supplies.
Although drilling in the Permian is for oil, most of the wells also produce associated natural gas liquids. The extra NGLs are why producers don’t need to drill specifically for gas in West Texas. Companies like Houston-based Plains All American Pipeline are building new crude pipeline capacity, but Enterprise is focused on giving the NGLs a home.
The cost of the Shin Oak project is not being revealed. Enterprise said the pipeline is expected to be completed in 2019. It will initially transport 250,000 barrels but could be expanded to carry 600,000 barrels daily.
Likewise, in March, Houston-based Kinder Morgan said it plans to build a 430-mile natural gas pipeline from West Texas’ Permian Basin to the Corpus Christi region.
Enterprise’s Mont Belvieu NGL complex is the largest of its kind in the world. Enterprise can sell the ethane to petrochemical plants or export the ethane, propane and butane to foreign markets. Enterprise also is building new fractionation capacity to separate the natural gas liquids into ethane, propane and more.
Enterprise said in January it will build an isobutane processing unit at its Mont Belvieu campus to create chemicals used in the manufacturing lubricants, rubbers and gasoline additives. It’s all part of Enterprise’s strategy to derive as much value as possible from cheap and ample natural gas and components such as isobutane. Portions of the isobutylene will go into gasoline additives like alkylate and methyl tert-butyl ether, or MTBE, which is typically exported to Asian markets. Enterprise already operates an MTBE production facility in Mont Belvieu.
This summer, Enterprise is expected to complete its neighboring propane dehydrogenation facility at Mont Belvieu. The plant would convert propane into propylene, which is one of the most common building blocks of plastics. Dehydrogenation is a process of removing hydrogen from molecule; the chemical composition of natural gas is mainly carbon and hydrogen.
This past fall, Enterprise completed the world’s largest ethane export terminal along the Houston Ship Channel.
In less than a decade, Greater Houston has shifted from net importer to net exporter as energy and petrochemical companies find international markets for crude oil, natural gas, natural gas liquids, refined products, and chemicals, including methanol, ammonia and propylene.