How 2011 Shaped Enterprise Products Partners for the New Year


The burgeoning demand for natural gas -- expected to increase 14% by 2035 in the United States -- made producers ramp up production and make the most of the opportunity. This opened up newer avenues of growth for pipeline operators such as Enterprise Products Partners (NYS: EPD) as well.

Enterprise Products Partners, a midstream service provider, had a stellar year, with the demand boom giving it remarkable top-line growth. Let's take a closer look at what Enterprise did in 2011 and try to find out how it'll fare in 2012.

Expansions, deals and -- guess what ... more expansions
Enterprise hasn't really looked back from the time it acquired Teppco Partnersand became one of the biggest pipeline companies in the United States. It has posted a string of impressive quarterly results since then and has forayed into a number of markets and plays, especially the Eagle Ford play.

South Texas' Eagle Ford, though relatively newer than other shale plays, offers great potential for production. Enterprise has made a concerted effort to expand its operations there and to that end has entered into a number of deals with some of the top energy companies. Itagreed to a six-year deal with Anadarko Petroleum (NYS: APC) to provide midstream services and struck similar deals with the likes of EOG Resources and Chesapeake Energy.

But if you thought that was all for Eagle Ford, you'd be wrong. The Houston-based company also hooked up with Enbridge (NYS: ENB) and Anadarko to construct a new natural gas liquids pipeline called the Texas Express pipeline, as well as two NGL gathering systems in the play. The pipeline, which is expected to have an initial capacity of 280,000 barrels per day (bpd), can be escalated to carry up to 400,000 bpd.

Enterprise expects to produce nearly 200,000 and 250,000 bpd from Eagle Ford operations, with the possibility to crank it up to as much as 750,000 to 850,000 bpd. Production levels are so high currently that last month an Enterprise spokesman described Enterprises pipelines as "chock-a-block full."

Knocked off its perch ... so what
The recent takeover of El Paso (NYS: EP) by Kinder Morgan Energy (NYS: KMP) has made Kinder the largest pipeline operator in the United States, with round about 80,000 miles of pipeline under its belt, thus surpassing Enterprise's 50,000 mile network. Nevertheless, the enterprising Enterprise juggernaut could not be stopped despite being knocked off its mantle.

Not so long ago, Enterprise completed the acquisition of its sister concern Duncan Energy Partners for a deal worth $2.5 billion, taking the company forward on its expansion quest. Enterprise has another $5 billion in expansions lined up for the next few years. Expanding operations and spreading the network will also help Enterprise better exploit the expected rise in consumption for natural gas.

And there's more
Earlier this year, Enterprise also announced plans to expand the Mid-American Pipeline system in the Rocky Mountains, which will help the company effectively transport natural gas from various processing plants in the region. The planned increase will help boost production to nearly 80,000 bpd, significantly higher than the current 300,000 bpd.

Moreover, together with Enbridge, it is looking to enhance the oil-transporting capabilities of its Texas coast refineries, with the 500-mile long seaway pipeline expected to start shipping 150,000 barrels by the second quarter of next year. The facility is expected to ship 400,000 barrels by 2013.

Take it forward
So 2012 is going to be an interesting year for the Houston-based midstream service provider as it looks to bring more and more natural gas to the market. Its expansion has put it in good shape for 2012, and more expansion seems to be in the cards as well. We at The Motley Fool will keep you up to date on all the happenings of Enterprise. Just add Enterprise to your own personalized Watchlist.

At the time thisarticle was published Fool contributor Shubh Datta doesn't own any shares in the companies mentioned here.Motley Fool newsletter serviceshave recommended buying shares of Enterprise Products Partners and Chesapeake Energy. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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