Enterprise Products Partners LP's midstream system handled more natural gas liquids (NGL), natural gas and crude oil during the second quarter, setting records for gas processing, gas pipeline and NGL fractionation volumes and helping to lift gross operating margin to 12% above the year-ago quarter, CEO Michael Creel said Wednesday.
"Increases in gross operating margin associated with these higher volumes, our marketing activities and improved hedging results in our natural gas processing business more than offset the effects of lower NGL and natural gas prices that resulted in a decrease in our equity NGL production and reduced drilling activity in certain regions," Creel said.
"During the second quarter of 2012, the U.S. petrochemical industry had an extended period of planned and unplanned plant turnarounds, which led to lower demand and prices for ethane. Most of these maintenance activities were completed in early July. We estimate that demand for ethane is currently running in excess of one million b/d, and we have seen ethane prices strengthen accordingly."
At the end of the first quarter Enterprise COO Jim Teague said ethane and propane oversupply would be worked off (see NGI, May 7).
NGL, crude oil, refined products and petrochemical pipeline volumes during the second quarter were 4 million b/d, which was 3% more than volumes in the second quarter of 2011. Total natural gas pipeline volumes increased 14% to a record 14.7 trillion Btu/d. NGL fractionation volumes increased 20% to a record 654,000 b/d. Equity NGL production decreased 20% to 96,000 b/d, while fee-based natural gas processing volumes increased 15% to a record 4.2 Bcf/d/d.
Net income for the second quarter increased 26% to $567 million from $449 million during the second quarter of 2011. Net income attributable to limited partners increased 25% to 64 cents/unit compared to 51 cents/unit for the second quarter of 2011. Revenues for the second quarter were $9.8 billion, compared with $11.2 billion for the same quarter of 2011 primarily due to lower commodity prices, which more than offset the effect of higher overall volumes.
Lower energy commodity prices result in a decrease in Enterprise revenues attributable to the sale of NGLs, natural gas, crude oil, petrochemicals and refined products; however, these lower commodity prices also decrease the associated cost of sales as purchase costs decline, Enterprise said.
Creel said Enterprise is on schedule to complete construction and begin commercial operation of $3 billion of organic growth projects in 2012.
"Most of these projects are associated with the Eagle Ford Shale development," Creel said. "The second 300 MMcf/d train at our Yoakum [gas processing] plant should begin commercial operations in August 2012. Natural gas and NGL pipelines and storage facilities that support the plant are also beginning operations. Each of the trains at the Yoakum facility has the capacity to produce over 40,000 b/d of NGLs. In addition, the first phase of our Eagle Ford Shale crude oil pipeline, which has 350,000 b/d of throughput capacity, is in the early stages of commercial operations."
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