Page 13 - NorthAmOil Week 36

NorthAmOil PIPELINES & TRANSPORT NorthAmOil

Enterprise cancels Midland-

to-ECHO 4 oil pipeline

TEXAS ENTERPRISE Products announced on Septem- term of the agreements being extended.
ber 9 that it was cancelling the 450,000 barrel per According to Enterprise, the cancellation of
day (bpd) Midland-to-ECHO 4 oil pipeline in Midland-to-ECHO 4 is anticipated to reduce its
Texas. The cancellation comes after production aggregate growth capital expenditures for 2020,
in the Permian Basin, which the pipeline would 2021 and 2022 by around $800mn. The company
serve, dipped earlier this year amid the collapse said it now expects growth capex, net of contribu-
in oil prices and demand, which prompted tions from joint venture partners, to be roughly
drillers in the region to dramatically scale back $2.8bn in 2020, $1.6bn in 2021 and $900mn
activity. in 2022. These projections do not include cap-
Curtailed Permian production is now grad- ital investments associated with Enterprise’s
ually returning, but the volatility of the past proposed deepwater offshore crude oil termi-
few months has proved to be a major obstacle nal, known as SPOT, which the company said
for a number of proposed projects, including remained subject to governmental approvals.
pipelines and export terminals. Significant The SPOT project is facing delays, however,
uncertainties over the near- and medium-term with the company saying it no longer anticipated
outlook are also causing the developers of such receiving the necessary regulatory approvals for
projects to be more cautious. the terminal in 2020.
Enterprise said it had amended agreements As a result of the Midland-to-ECHO 4
with some of its customers, which will give it the cancellation, Enterprise expects to record an
ability to use its existing pipelines to support its impairment charge of around $45mn to its
crude obligations while cancelling Midland-to- third-quarter earnings this year. Despite the
ECHO 4. The company added that generally the cancellation, analysts still believe that pipeline
amendments provide for the reduction of near- capacity out of the Permian is still more than
term volume commitments in exchange for the needed at current production levels.™

Energy Transfer expects Dakota

Access expansion online in 2021

US PIPELINE operator Energy Transfer expects a The Army Corps has argued that the district
planned expansion of its Dakota Access oil pipe- court’s ruling, if not “corrected”, would create
line capacity to be in service by the end of next year. “impossible” standards for future infrastructure
“Expect additional capacity to service com- projects. Indeed, it is highly unusual for already
mitments received through recent open seasons operational pipelines to have permits revoked,
to be in-service in the third quarter of 2021,” the and other pipeline operators are watching the
company said in an investor presentation that court case closely.
was posted to its website this week. Energy Transfer and the Army Corps have
The expectation comes despite the fact that said they are in discussions with the Standing
Dakota Access is currently mired in litigation Rock Sioux Tribe, which wants the pipeline to
that could result in the pipeline being shut down be shut down as it passes beneath a lake that is
altogether. The US Army Corps of Engineers has a critical source of drinking water for the tribe.
been ordered to conduct a new environmental Energy Transfer and the Army Corps added that
impact review on the pipeline, which it said it their appeal “will be fully briefed by September
had begun last week. The review could take more 30, with oral argument to be scheduled on an
than a year. expedited basis”.
An appeal is also underway against a US Dis- In addition to the threat to Dakota Access’
trict Court for the District of Columbia decision existing operations, Energy Transfer still
that Dakota Access be shut down and drained requires approval from Illinois regulators before
until the environmental review is complete. it can move ahead with the expansion of capacity
That ruling was temporarily blocked by the US on the pipeline.
Appeals Court, but the pipeline’s existing opera- If Dakota Access survives and its expansion
tions remain under threat from a potential shut- goes ahead, its capacity will be roughly doubled
down further down the line. from 570,000 barrels per day (bpd) currently.™

Week 36 10•September•2020 www. NEWSBASE .com P13