Enterprise mulls advancing Permian NGL pipeline conversion to crude

NEW YORK (Reuters) - Enterprise Products Partners LP said on Wednesday it could convert one of its natural gas liquids (NGL) pipelines to crude oil out of the Permian basin as early as the second quarter of 2019, ahead of an earlier timeline of 2020.

The startup of the Shin Oak pipeline, expected in the second quarter of 2019, would provide Enterprise the option to divert NGL volumes from one of its existing NGL pipelines onto Shin Oak and repurpose the vacated NGL pipeline to crude oil service.

“We’re not through building takeaway out of the Permian, and we are putting ourselves in a position to be able to convert a pipeline, but the earliest that would be is when Shin Oak comes on, and that’s not until the second quarter of next year,” Chief Executive Jim Teague said on the company’s third-quarter earnings call.

A production surge in the Permian basin, the biggest oil patch in the United States, has outpaced pipeline takeaway capacity, causing bottlenecks and depressing prices in the region. Midstream companies have raced to add takeaway capacity and provide links to the Gulf Coast refining and export hub.

Enterprise has said it has three existing NGL pipelines that run from the Permian Basin to the Gulf Coast - the Seminole Blue, Seminole Red and Chaparral.

Separately, the company has expanded capacity on the Seaway pipeline using drag reducing agents this month.

The Seaway system hauls crude from Cushing, Oklahoma, the delivery point for U.S. oil futures, to Gulf Coast refineries. Last quarter, the company said it would expand capacity on the Seaway system capacity to about 950,000 barrels per day from 850,000.

A high-stakes competition is emerging among companies proposing multi-million-dollar crude terminals along the U.S. Gulf Coast to handle a gusher of shale oil coming from West Texas oilfields.

Enterprise has said it expects to receive permit approval in 2020 for its proposed oil export terminal off the Texas Gulf Coast for supertankers.

“Our deepwater port project is advancing on both the engineering and commercial fronts. We’re in discussions with domestic producers and global consumers,” Teague said on Wednesday.

He touted the proposed terminal’s connectivity to storage and various grades of crude as well as access to third-party pipelines and storage. “I don’t think there’s another location that has that,” he said.

Reporting by Devika Krishna Kumar in New York; Editing by Leslie Adler