Pipeline capacity from Enterprise's import terminal to its large fractionation and storage complex in Mont Belvieu will be expanded to accommodate the increased capacity of the terminal. In addition, Enterprise will increase its capacity to fractionate, or separate, mixed butanes by approximately 20 MBPD, giving the partnership the capability to fractionate up to 300 MBPD of imported mixed butanes, domestic butanes and butanes sourced from the partnership's isomerization facilities at its Mont Belvieu facility.
Enterprise designed and constructed its import/export terminal and supporting infrastructure in the mid-1990s with the potential for significant capacity expansions requiring only nominal amounts of additional capital investment. The Phase 2 expansion will take the import terminal up to its maximum designed nominal capacity of 400 MBPD and the export terminal up to approximately 40% of its designed maximum capacity. Construction will begin immediately with completion expected in the second quarter of 2007. The incremental cost of the Phase 2 expansion, including related facilities, is approximately $40 million. Based on utilization rates of 25% of the incremental capacity the project is expected to generate a 15% return on investment.
Waterborne NGL import volumes to the U.S. have set three consecutive annual records, with 2005 imports totaling approximately 61.4 million barrels. According to energy consultants Purvin & Gertz, Inc., at their recent international seminar, world-wide LPG supplies are expected to grow significantly. Through 2010, they project that international supplies of LPGs, principally from the Middle East and the Atlantic Basin, will increase by over 65 million barrels per year with surplus supplies most likely delivered to the U.S.
Currently, Enterprise's existing import capacity is substantially subscribed under term contracts. The expansion of Enterprise's import facility and supporting assets at Mont Belvieu would facilitate the importation of increased supply of LPGs to the United States.
"This project builds on Enterprise's leading market share of LPG import and export terminaling services," said Robert G. Phillips, Enterprise's President and Chief Executive Officer. "In 2005, Enterprise handled approximately 54% of total waterborne LPG imports into the United States. By expanding our capabilities, we will be able to handle increased imports at rates that are twice our current capacity and provide supporting services through our integrated fractionation, pipeline and storage value chain."
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