Renewable Energy

EXCLUSIVE-Enterprise Products explores sale of Texas oil terminal stake -document

U.S. pipeline operator Enterprise Products Partners LP is looking to sell its 50% stake in a recently-completed South Texas crude export terminal, according to a marketing document viewed by Reuters.

By Collin Eaton

HOUSTON, June 17 (Reuters) - U.S. pipeline operator Enterprise Products Partners LP EPD.N is looking to sell its 50% stake in a recently-completed South Texas crude export terminal, according to a marketing document viewed by Reuters.

Enterprise is weighing an exit from the joint venture with terminal operator Plains All American Pipeline LP PAA.N after proposing to build its own offshore port near Houston. There are at least eight proposed deepwater oil ports on the U.S. Gulf Coast seeking to handle rising shale exports.

The Houston-based pipeline operator has hired RBC Capital Markets LLC to advise on a sale, according to the document, which did not indicate a price.

Enterprise declined to comment, referring queries to Plains, which did not respond to requests. RBC Capital Markets declined to comment.

The joint venture, Eagle Ford Terminals Corpus Christi, is connected to the two companies' 660,000 barrels per day (bpd) Eagle Ford JV Pipeline. The pipeline brings crude from the Permian Basin and Eagle Ford shale fields to the U.S. Gulf Coast.

The potential sale comes as three new crude pipelines will by mid-2020 begin carrying some 2 million bpd from Texas shale fields to the U.S. Gulf Coast.

Enterprise in January filed to build its own deepwater export terminal, Sea Port of Texas (SPOT), at a site 40 miles (64 km) off the coast of Houston.

"Enterprise is focusing on the Houston market," said Sandy Fielden, an analyst at Morningstar.

Enterprise has a much larger presence in the Houston area than in Corpus Christi, and it is unclear whether the terminal can compete with larger facilities being built in the Corpus Christi area, Fielden added.

"That location isn't somewhere they feel is their sweet spot."

Last month, Enterprise Chief Executive Jim Teague said Chinese companies looking to sign long-term agreements to buy U.S. crude oil have virtually disappeared amid the Sino-U.S. trade dispute.

The Eagle Ford Terminals Corpus Christi terminal's dock will be able to partially load Very Large Crude Carriers (VLCCs) once a project to dredge the Corpus Christi ship channel is completed next year.

The facility can load up to 40,000 barrels of oil per hour and has four storage tanks with a combined 1.4 million barrels of storage capacity, with land available to expand capacity to 5 million barrels.

The marketing document called the facility "a world-class crude oil export terminal" that is "is well-positioned to capitalize on early-mover advantage with an expected in-service date of Q2 2019."

Asian demand for U.S. crude is expected to continue growing, with around 50% of 2018 U.S. Gulf Coast exports reaching Asian destinations, according to the marketing document.

U.S. crude exports could reach 8 million barrels per day by 2025, the company said. Currently, the U.S. exports around 3 million bpd of crude, according to government data.

FACTBOX-Texas pipelines projects to move shale oil to U.S. Gulf Coast

FACTBOX-Status of proposed U.S. Gulf Coast crude export terminals

(Reporting by Collin Eaton in Houston Editing by Marguerita Choy)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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