My West Texas – Erin Douglas
Enterprise Products Partners will cancel a crude oil pipeline project that would have transported oil from Midland to markets in the Houston area, the company said Wednesday.
The Houston pipeline operator amended agreements with customers to cancel the pipeline project, which would have moved about 450,000 barrels of crude per day from Midland to the ECHO-4 terminal in Houston and provided additional capacity to West Texas’ Permian Basin. Instead, the company said it will use its existing pipelines to transport crude oil.
“This is another example of Enterprise working with customers for a ‘win/win’ solution that allows our customers and Enterprise to better allocate capital during the challenging times of the current economic cycle,” Enterprise co-CEO Jim Teague said in a statement.
The savings from the cancellation will allow Enterprise to reduce debt and return capital to the partners, including through buybacks, Teague said.
Enterprise expects the canceled project to result in an impairment charge of about $45 million to its third-quarter earnings even as it helps the company reduce capital spending increases by about $800 million during the next two years.
The company, like the rest of the industry, has struggled since the December outbreak of the coronavirus that has slashed global demand for oil. Still, the company made $1 billion in the second quarter, 15 percent less than during the same quarter of 2019.
Founded in 1968, Enterprise Products Partners manages 50,000 miles of pipelines and maintains 260 million barrels of storage capacity for natural gas liquids, crude oil, refined products and petrochemicals.
