Enterprise Products Partnerships

Enterprise Products Partnerships

Enterprise Products Partnerships is a Houston Texas based company providing services to producers and consumers of the oil industry, specializing in natural gas, refined products, and crude oil pipelines through the United States. Their assets include over 51,000 miles of pipeline, 24 natural gas processing plants, 22 natural gas liquids and propylene fractionators, and 6 off shore hub platforms.

The company operates in four different business division’s natural gas liquid (NGL) pipelines and services, offshore pipelines and services, onshore natural gas pipelines and services, petrochemical services. The onshore natural gas pipelines and services division is responsible for the company’s approximately 18,000 miles of onshore pipelines that help connect the company with many states spread through out the United States and the company’s marketing activities. The natural gas liquids and services division includes natural gas liquids related marketing activities and the NGL processing business. The offshore natural gas and crude oil pipeline transportation and related offshore platform operations are provided by the offshore pipelines and services division. The final division is petrochemical services, provides isomerization and propylene fractionation services as well as the sale of certain petrochemical products. (Business Insights: Essentials, 2015)

Enterprise Products Partnerships also know as EDP is in the basic materials sector and in the Independent Oil and Gas industry. This industry is in a major flux right now due to rapidly changing price of oil and the new record lows we have had this year. “At $60 per barrel, the current price of oil is likely approaching or already below the expected per-barrel costs of some of the most expensive U.S. tight oil projects,” (Silverstein, Forbes, 2015) the U.S. Energy Information Agency says. These prices have scared many companies involved with oil and have caused them to either put on hold or halt many building projects or even led to laying off workers. “According to the U.S. Energy Information Administration, anything below $60 a barrel forces the hand of the oil sector: Either pull up stakes or keep at it and hope to be last one standing. Either way, something has to give, which means people’s jobs, project expansions or shareholders’ dividends.” (Silverstein, Forbes, 2015)

Some of the opportunities this industry is taking advantage of are the rapidly increasing rate of production within the United States and the possibility of having the ban of exporting oil and natural gas to foreign countries lifted soon by the government. In 2008, this country created 5 million barrels a day. “Now it accounts for 10 percent of the globe’s development, or about 8.4 million barrels a day. This year, U.S. production is expected to hit 9.3 million barrels a day, unless drillers slow up.” according to Ken Silverstein of Forbes Business. (Silverstein, Forbes, 2015) This industry is a highly contested one filled with many different companies but there are a few at the top that stand out from the rest. Some of the competitor’s that EDP faces in this industry are Energy Transfer Partners, TransCanada Corporation, Williams Companies Incorporated, EQT Midstream Partners, Gdf Suez and Kinder Morgan Management Energy Partners. (Business Insights: Essentials, 2015) Some of the different projects rival companies are involved in are TransCanada is involved in getting the United States government to allow for the northern section of the Keystone Pipeline to be built to allow for a direct route of over 900,000 barrels a day to be delivered to the Gulf Coast refineries. (Silverstein, Forbes, 2015) Many other competitors are in the process of trying to find ways to keep up with Enterprise Products Partnerships ways of exporting oil and to find new ways to lower prices and be able to stay competitive in domestic and international markets.

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One of the most important things Enterprise has been able to do is to seem to always be one step ahead of their competition and other firms in the market. Whether it has been a merger with another company or planning a new construction project many years in advance that has helped them be at the forefront of the industry. The major operational issues I have found with Enterprise Products Partners is not a problem effecting everyday business but has more to do with there rapid expansion and being able to make use of there facilities the best way possible. These issues along with dealing with ever fluctuating oil prices and there controversial method of getting around the US oil exporting bans have led the company to be in hot water and make some important decisions about the future direction of the company.  

The company has been under some heavy questioning recently due to many rival companies complaining about their refining process and how it has allowed them to export oil. “A Houston pipeline company became the envy of the energy industry last year when it found a way around the decades-old legal ban on exporting U.S. oil (Wall Street Journal, 2015).” Operationally the company has had to make sure they continue to follow all proper techniques and methods knowing they are being closely watched. “Companies including BP PLC have complained to the U.S. Federal Trade Commission, which is investigating (Wall Street Journal, 2015).”

This new process that has led to many complaints to the Government agencies in charge of these practices were approved before they began implementing them allowing them to be the first company able to do this. “Enterprise and its lawyers helped persuade the U.S. Commerce Department that heating up and distilling ultralight oil in the field to remove volatile gases--instead of running it through a traditional refinery--was enough to qualify it as a legally exportable refined fuel (Wall Street Journal, 2015).” An innovation like this is what’s driving EPD’s profit and business to new heights. The company is contracted to load a minimum of 21 more tankers with at least 13 million barrels of ultralight oil this year. Since Enterprise started exporting ultralight oil at the end of July, operating profits in that segment of its business have seen a huge uptick in numbers jumping nearly 36%, earning it an additional $110 million from July 2014 through the end of the year. (Wall Street Journal, 2015) Enterprise jumped out in front in the race to export ultralight oil and has since reaped the benefits of being one of the first to be able to fulfill orders with overseas clients. “U.S. exports of condensate have been given an important boost after pipeline company Enterprise Products Partners LP agreed annual contracts with at least two major trading companies to sell the light crude, trade sources said (Reuters International, 2015)