Enterprise eyes Cline Shale for pipeline growth

The Cline Shale is rapidly becoming one of the hottest new plays for natural gas producers — and midstream companies are hustling in to provide the needed infrastructure.

Enterprise Product Partners said it is working with producers in the Cline Shale, as it laid out plans at an analyst meeting on Wednesday in Houston. Enterprise is one of the largest North American pipeline companies — with an estimated $72 billion net worth — and has benefited richly from the energy boom in the last five years and the accompanying need for infrastructure.

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Many of the hottest opportunities for the company are in Texas, according to Bill Ordemann, senior vice president of Enterprise.

“We are excited about what we are hearing in the Wolfcamp and Cline Shale,” Ordemann said, explaining that Enterprise is already working with producers to establish more processing plants and pipelines in the Cline Shale.

The Cline Shale is located in West Texas on the east shelf of the Permian Basin. Several companies, including Chesapeake, Devon Energy and Apache Energy, are active in the Cline Shale.

The company invested $3 billion in 2012 to complete 26 capital projects, as it expanded its web of pipelines to shale plays. It has an additional $7.5 billion in projects underway and estimates that it will begin work on $2.2 billion in projects in 2013.

One of Enterprise’s projects, a natural gas liquids export expansion project, is planned to go online in 2013.

Demand from producers, also called producer-push, for more infrastructure in the Eagle Ford and the Haynesville shales has driven Enterprise’s expansions. The company processes, transports and stores natural gas, natural gas liquids and petrochemicals.

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There is also a demand for infrastructure coming from petrochemical companies, would-be liquefied natural gas exporters, and new natural gas power generators. The combination of these two forces has kept midstream companies like Enterprise busier than ever.

“I have been in this business for 30 years, and I have never seen anything as significant as the simultaneous producer-push and end-user pull going on now in the Texas-Louisiana region,” said Jim Cisarik, senior vice president of Enterprise.

Enterprise plans to further build up its infrastructure in the Eagle Ford and the Haynesville, where it built up its network at the end of last decade in response to shale-driven growing demand.

“These pipelines got built because the producers needed flow assurance,” Cisarik said, noting that Enterprise’s infrastructure in these plays helped producers develop shales more rapidly.

Ordemann also expects growing offshore production in the Gulf of Mexico to increase the need for more pipelines.

“The story is that we are pretty bullish on the Gulf as a crude oil providence, going forward,” Ordemann said. Enterprise estimates that the Gulf of Mexico will generate about a million barrels a day by 2020.

“The deep water gulf is going to be all about oil,” Ordemann said, explaining that Enterprise will focus on building up the infrastructure to transport Gulf crude oil.

Enterprise owns approximately 50,000 miles of onshore and offshore pipelines and 200 million barrels of storage capacity for NGLs, petrochemicals, refined products and crude oil.

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