(Reuters) - Enterprise Products Partners LP EPD.N on Wednesday said crude pipeline volumes fell 26.1% in the third quarter as the COVID-19 pandemic hurt oil prices and left midstream companies with fewer barrels to transport after producers slashed output.
The coronavirus outbreak ended a boom in U.S. shale production, which had prompted a rapid expansion of U.S. pipeline networks to carry oil from fields to processing centers and onto refineries and export terminals.
AJ Teague, co-chief executive officer of pipeline operator Enterprise, said he expects a signal for higher crude oil prices as early as the second half of next year on recovering demand and a sharp decline in shale production.
“In the interim, we believe the midstream industry will be challenged in its producer-facing businesses,” Teague said.
U.S. pipeline companies have been sweetening terms and reducing rates to keep producers using their lines as oil transport volumes decline due to the pandemic-led plunge in demand.
Crude pipeline transportation volumes fell to 1.7 million barrels per day (bpd) in the quarter from 2.3 million bpd a year earlier.
In September, Enterprise abandoned a major 450,000-bpd Permian crude pipeline project in Texas, one of numerous projects on hold due to the slump in demand, and agreed to give customers lower near-term commitments on other pipelines.
Revenue fell 13.1% to $6.92 billion, missing analysts’ estimate of $7.1 billion, hurt by a fall in volumes of gas, natural gas liquids and crude oil as well as lower crude terminal volumes.
Reporting by Arathy S Nair in Bengaluru; Editing by Devika Syamnath
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