Don't Stop - Top-Tier Midstreamers Double Down on Expanding Permian-to-Gulf Infrastructure

Wednesday, 02/26/2025  Published by: Housley Carr  rbnenergy.com

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In their first earnings calls of 2025, the handful of large midstream companies that provide the gamut of “wellhead-to-water” services in Texas laid out plans for yet another round of projects — everything from gas processing plants and takeaway pipelines to fractionators and export terminal expansions. At the same time, many of these same midstreamers expressed a degree of caution about overbuilding. They sought to reassure Wall Street that they were only approving plans underpinned by strong commercial support. In today’s RBN blog, we discuss the latest capital spending plans of this select, upper tier of midstream service providers. 

Over the past few years, a small but gradually growing group of midstreamers have seen the benefits of owning and operating the infrastructure that processes, transports and, in many cases, exports the increasing volumes of crude oil, natural gas and NGLs emerging from wells in the Permian Basin. As we said in Get Ready, our late-2023 Drill Down Report on gas-and-NGL-focused “networks” in the Lone Star State, offering a full range of midstream services “provides a number of important benefits — chief among them, the ability to operate with extraordinary efficiency, collect fees from shippers each step of the way, and feed pipelines, fractionators, storage and export terminals along the network’s value chain.”

In the report, we focused on the four companies with the most comprehensive sets of midstream assets in that space — Enterprise Products Partners, Energy Transfer, Targa Resources and Phillips 66. More recently, in At Last, we blogged about MPLX and ONEOK joining that august club with their plans (some joint and some solo) to build out NGL pipeline, fractionation and LPG export capacity in the Texas City, TX, area.

A few midstreamers also provide wellhead-to-water services for crude oil, including Enbridge, which holds significant ownership interests in the Gray Oak and Cactus II pipelines as well as 100% of the U.S.’s #1 crude export terminal, the Enbridge Ingleside Energy Center (EIEC) near Corpus Christi. Similarly, Enterprise owns, among other things, the South Texas Crude Oil Pipeline System, stakes in elements of the Midland-to-ECHO system, and a host of oil storage and export terminals, including the ECHO terminal and Enterprise Hydrocarbons Terminal (EHT) in the Houston area.

In today’s blog, we’ll begin a review of what the largest midstream network owners in Texas have committed to adding to their portfolios this year and in 2026. As you’ll see, most of these companies continue to expand their Permian-to-Gulf capabilities at a full-throttle pace, though — as we noted up top — at least a few of them have sought to assure Wall Street analysts (and investors in general) that they will not get over their skis.

Enterprise is a case in point. The midstream giant recently made headlines when, during its February 4 earnings call, it acknowledged that the company had so far “not gotten enough traction” in commercializing its long-planned Sea Port Oil Terminal (SPOT) and would not proceed with the project unless market dynamics shift and long-term volume commitments materialize. Co-CEO Jim Teague said that while the economics behind SPOT — a deepwater crude oil export facility off Freeport, TX, that would be capable of fully loading Very Large Crude Carriers (VLCCs) — continue to compare favorably to onshore terminals that can only partially load VLCCs, there have been at least a couple of notable changes in the market since the project was proposed six years ago.

For example, Teague said that back in 2019 many forecasters were predicting the U.S. would be exporting more than 7 MMb/d of crude oil by 2024. Instead, we’re exporting around 4 MMb/d. Also, he said it was assumed that most U.S. exports would be bound for Asia — an ideal destination for the long-haul VLCCs that would be SPOT’s forte. However, Russia’s invasion of Ukraine resulted in a doubling of U.S. crude exports to Europe to about 2 MMb/d, and those shipments typically are sometimes better handled by smaller tankers like Aframaxes and Suezmaxes that can be fully loaded at most onshore docks.

SPOT aside, Enterprise is in full-bore expansion mode, with the vast majority of its major capital projects tied in one way or another to the Permian. As shown in Figure 1, the projects include:

• Three 300-MMcf/d gas processing plants in West Texas: the Orion plant in the Midland Basin (striped purple processing plant icon; online in Q3 2025), Mentone West 1 in the Delaware Basin (upper striped red processing plant icon; also Q3 2025), and the adjoining Mentone West 2 (lower striped red processing plant icon; H1 2026). When the projects are all in service, Enterprise plants in the Permian will have the capacity to process more than 4.7 Bcf/d of gas and extract up to 640 Mb/d of NGLs.
• The new 550-mile, 600-Mb/d Bahia Pipeline (dashed blue line), which starting in Q4 2025 will transport mixed NGLs (aka Y-grade) from gas processing plants in the Delaware and Midland basins (including Mentone West and Orion) to Enterprise’s NGL storage and fractionation hub in Mont Belvieu.
• Fractionator 14 (striped pink and white fractionator icon), a 150-Mb/d facility at Mont Belvieu that in Q3 2025 will begin separating Y-grade into ethane, propane and other NGL purity products. (Enterprise expects the fractionator to be able to process up to 195 Mb/d.)
• The new Neches River Terminal (NRT; striped green terminal icon) in Beaumont — the first part of which will involve adding 120 Mb/d of ethane-only export capacity in Q3 2025. Enterprise will follow that up in H1 2026 with the startup of a “flex” terminal (see Hot to Go!) that can export either 180 Mb/d of ethane, 360 Mb/d of LPG or a combination of the two.

Enterprise also is planning other export-related projects at two of the company’s Houston-area terminals. At its Morgan’s Point ethane and ethylene facility (aqua terminal icon), Enterprise will add a 900-Mbbl refrigerated ethane tank that will enable higher loading rates (online in Q4 2025). And at EHT (yellow terminal icon), the midstreamer is in the early stages of a project to expand the terminal’s LPG loading capacity by more than 300 Mb/d — that effort is slated to wrap up by the end of next year.

Energy Transfer has a similarly ambitious plan for expanding elements of its Permian-to-Gulf midstream network. First, it’s in the final stages of adding a total of about 200 MMcf/d of capacity to four gas processing plants in West Texas — 50 MMcf/d was added at both Gray Wolf and Orla East in Q4 2024 and similar capacity is being added to Arrowhead II and Arrowhead III in Q1 2025. The company is also continuing work on a project to expand the capacity of its Sabina 2 NGL products pipeline (purple line in Figure 2 above) between Mont Belvieu and its Nederland NGL export terminal. In December it completed an effort to increase the pipe’s capacity from 25 Mb/d to 40 Mb/d and by mid-2026 it expects to finish an expansion to 70 Mb/d. There are several other projects in the works too, including:

• The 200-MMcf/d Badger gas processing plant (striped green processing plant icon) in the Delaware Basin — actually a facility relocated from another site — is expected to be finished in mid-2025. In the Midland Basin, Energy Transfer plans to add the new, 200-MMcf/d Red Lake IV plant (striped red processing plant icon) in Q3 2025 and the 275-MMcf/d Mustang Draw plant (striped aqua processing plant icon) in H1 2026.
• A debottlenecking project on the company’s West Texas Gateway NGL Pipeline (brown line) that Energy Transfer said will enable it to fully utilize its interests in the EPIC NGL Pipeline and optimize its deliveries into Mont Belvieu. Also planned are upgrades to the company’s Lone Star Express NGL pipeline (orange line) that are expected to provide more than 90 Mb/d of incremental Y-grade takeaway capacity out of the Permian in 2026.
• Frac IX (striped yellow fractionator icon), a new, 165-Mb/d fractionator at Mont Belvieu slated to start up in Q4 2026.
• An expansion at Energy Transfer’s Nederland Terminal (green terminal icon) will add flex capacity to export up to an additional 250 Mb/d of LPG, ethane or ethylene. The initial phases of the project are scheduled to come online in mid-2025, with the rest to follow by the end of this year. Nederland Terminal currently can export up to 500 Mb/d of LPG and 180 Mb/d of ethane.

The most important project on Energy Transfer’s list is probably the Hugh Brinson Pipeline (dashed pink line), a new, 400-mile gas conduit that will run from the Permian’s Waha Hub to Maypearl, TX (south of Dallas/Fort Worth), where it will connect to the company’s existing gas pipelines — and gas storage — in that part of the state. Formerly called the Warrior Pipeline, the Brinson project was sanctioned by Energy Transfer in December. It is expected to be constructed in two phases, with the first phase having a capacity of 1.5 Bcf/d and scheduled to come online by the end of next year. The company has said that as part of the first phase, it will also build the Midland Lateral (dashed green line) to connect Energy Transfer and third-party processing plants in Martin and Midland counties. A second phase of Brinson — not yet sanctioned — would increase the pipeline’s capacity to 2.2 Bcf/d.

Finally, Energy Transfer — like Enterprise — continues to explore the possibility of developing an offshore crude oil export terminal. However, Energy Transfer’s Blue Marlin project, which would be located off the Southwest Louisiana coast and make extensive use of existing pipeline and other infrastructure, has not yet secured its federal deepwater port license, something SPOT already has in hand. In the next blog in this series, we’ll discuss the latest plans by Targa and Phillips 66 to add to their Permian-to-Gulf networks.