Enterprise Products Partners LP on Wednesday said it had scrapped a project to build a 450,000-bpd Permian crude pipeline in Texas due to persistently low oil prices. The company also agreed to give clients lower near-term commitments on other pipelines. In April, Enterprises announced a cut in the 2020 budget by $1.1 billion and said the completion of the planned pipeline, also known as the Midland to ECHO 4 pipeline (M2E4), was pushed back by six months to next year’s second half.
Enterprise said the cancellation would cut growth capex for 2020, 2021, and 2022 by about $800 million to $2.8 billion, $1.6 billion, and $900 million, respectively. The move will also be reflected on a $45 million impairment charge in this year’s third-quarter earnings.
The M2E4 cancellation is in line with the deferrals of other energy projects in the US, including export terminals and pipeline builds. US Energy companies have chopped capital expenditures as the coronavirus pandemic hurt prices. At the same time, analysts estimate that the existing pipeline capacity in the Permian had already been sufficient to meet the region’s current output level.
Fellow US midstream players MPLX LP in May abandoned Permian to Gulf Coast natural gas liquids pipeline project, while Kinder Morgan said its Permian Pass pipeline project faced uncertainty.
