So ladies and gentlemen, thank you for standing by, and welcome to the Enterprise Products Partners ESG and Analyst Day Q and A. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. I would now like to introduce today's conference call, Mr. Randy Burkhalter.
You may begin.
Thank you, Kevin. Good afternoon, everyone, and welcome to the Enterprise Q and A call. This is a follow-up to, as Kevin said, to our ESG and Analyst Day. We have a number of members of management here today to respond to your questions. Before we start the Q and A call, I must make some forward looking statements here.
So during this call, we will make forward looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on the beliefs of the company as well as assumptions made by and information currently available to Enterprise's management team. Although management believes that the expectations reflected If such forward looking statements are reasonable, they can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward looking statements that may be made during this call. And so Kevin, with that, we're ready to take questions from the audience.
A. We also ask that you limit yourself to one question and one follow-up. Our first question comes from Jeremy Tonet with JPMorgan.
Hi, good afternoon.
Good afternoon, Jeremy.
Just want to kind of pick up, I guess, you guys talked about your outlook For rationalizing assets across your asset base there. And just wondering if you could expand a bit on that, I guess, What feeds into the decision of retiring or also could these plants be easily brought back if activity picks up or could they be moved to a different Basin, if activity there warrants it? Or how do you think about, I guess, asset sales in this environment for some of those, Building on the part of rationalizing the asset base there.
Hey, this is Natalie Gayden. So I did speak to rationalization of assets And we're always looking to make sure that our production profile aligns with the processing facilities That we have in service. Our processing facilities to bring back our next day type of plans And Graham can probably expand on this, but they are quicker than what you would think of a refinery or petrochemical complex.
Yes. Just to add to that, it's not a big effort to bring many of these plants back or in some cases to relocate them.
Got it. That's helpful. Thanks. And if I think about the petchem side of your business, there's been expansion there and there's notable Part of your existing program focused on petchem complex, PDH, what have you. Just wondering if How you think about how that fits into the portfolio overall?
Is there a certain kind of limitation that you think it would represent within Your EBITDA overall, just given how it seems it's a bit more capital intensive, some of these assets are a bit more delicate or could go offline and Some of the pet chems trade out a little bit lower multiple than what midstream trades at. So just wondering how you think about that balance within your portfolio. On the other side, you do have very Wrong barriers to entry there.
Yes, Jeremy, this is Chris Danna. I talked a little bit about our growth in the recordings And we see a lot of growth opportunities in that. So I don't know that we have a defined Set a ratio on what the EBITDA will be in the future versus the rest of Enterprise. We do have a goal Of over $1,000,000,000 by 20 24 for the petchem segment. But we see a lot of Kennen, as long as those are good returns, we plan to continue to assume.
Yes, Jeremy, this is Jim. In terms of multiples, This we're not an ethylene we don't have crackers. We don't have polyethylene, polypropylene plants. We're more of a midstream entity as it relates to petrochemicals. And you look at it Just like it is with crude oil or natural gas or NGLs, if you look at our PDH plant, the We're building those are tolling arrangements with investment grade customers.
If you look at our PGP plants, they're pretty much, I guess, Chris, pretty much all termed up. Yes. So we like the business, but we also like the way we can structure contracts within that business That are more I guess those PDH plans are they're really annuities.
Got it. I'll stop there and get back in the queue. Thank you.
Our next question comes from Jean Ann Salisbury with Bernstein.
Hi, good morning. A lot of investors think Haynesville could quickly get constrained again even after All of the pipeline expansions including yours given the rig count there, how much more capacity out could you easily add and how long would it take?
Hey, Jean Ann, this is Randy. Which asset were you referring to?
The Haynesville.
The
Haynesville. Haynesville. So as far as the capacity that we've got out of the Haynesville.
You're full, aren't you?
I'm full for the next 10 years. I know there's some pipes coming on, maybe 1 or 2 more. And after that, we'll see. But there's been a lot of talk about more pipes in the ground. We'll see what happens.
But we're full for the next 10 years plus.
Okay. And if you did want to add a new pipe, it'd be kind of like 18 months, I guess it's much easier to build there, it seems like than other places.
Yes. I'm from Louisiana. I guess that's why.
Okay. Thank you. And then, this is a little more near term, I guess, on the Analyst Day, but it seems like about Half of chemical plants and a lot of refineries are still starting up. I assume that any of these that your customers are declaring force majeure and probably not paying you. Can you give a sense of how material you expect the loss from the Texas REITs to be?
Who wants to take it? Chris, you want to take it for Petrochemical? Sure. Yes.
This is Chris Danna again. Just in terms of the petchem business, We had a planned outage of our PDH going on at the time. So that's not really impacted. And then with regard to our splitters and other businesses, we experienced downtime probably equal to Our customers and have a little bit of makeup capability. So I don't expect it to really be a material impact.
Okay, great. Thank you. And then if I could sneak in one more quick one. I had a question about the Delaware I really appreciated all the color in your slides today, Natalie. Does the overbuild of capacity that you described And the Delaware put pressure on the rates that you can charge both for processing and for downstream or when you describe the contracts as take or pay an acreage dedication, Does that imply that the rates that you're getting are locked in for at least the medium term?
Yes. For the take or pay, definitely locked in. And I sure hope That it continues to compress and get tighter for processing capacity. That's all good for us because it does exactly what you're talking about, Rates move up. But as far as the take or pay that I discussed, I don't know, 70% of nameplate or more, definitely just a flat rate escalates For the next 10 years or more.
Our next question comes from Michael Blum with Wells Fargo.
Thanks. Good afternoon, everybody. I wanted to go back to the petrochemical Segment for a minute. There was a comment made that you're looking at several transformational investments or potential transformational investments. And And I think you said you're not going to say anything about it for another year.
So the question is just can you obviously, not going to detail what these investments are, but can you Sort of frame the size of them or how much capital you could possibly be talking about here? Just anything you could bucket For us in terms of the size of the potential opportunity?
We really can't, Michael, Not right now. These things are we're at a pretty sensitive point. And it's kind I'm like ass fishing with a worm. We got him bumping the worm. We still got to hook him.
Got it. Understood. 2nd question, I just wanted to ask about buybacks. So the question is really, do you ever think you'll Get to a place where you would have a more programmatic buyback approach as opposed to opportunistic as Not a fixed number per se, but maybe a percentage of discretionary cash flow or something like that. And within that, would you think about increasing buybacks versus increasing distribution?
Thanks.
Yes. Michael, yes, I mean, you never say never, right? So I mean, could we get to the point of a programmatic buyback? We could. How we would think about it, a programmatic buyback versus distributions, some of it would depend on the facts when we get to that point.
And I'll still come back. The most efficient way to come in and return capital And an MLP is to come in and do it through distributions. And whether the distributions Our regular distributions or whether distributions are special distributions, it's the most tax efficient way to get cash In the pocket of limited partners. And the nice thing about the buybacks is you're Locked into an amount like you would be with a regular distribution. But I thought it would really just have to depend on what the fact set is at the time and What the other opportunities are, but just it's really fact set specific once we get to that point.
Thank you.
Our next question comes from Chuck Stanley with Wolfe Research.
Good afternoon. One follow-up on petrochemicals and I know you don't want to talk to specific projects, but At a high level, can you give a sense if some of the opportunities you're seeing in the next few years are in similar areas of the petchem business Where you already operate or could you look to broaden your position in petchem and I guess relatedly are acquisitions a possibility in that business as well?
I guess acquisitions are always a possibility, but that's we're not working any write down. We're if you're asking are we going to build an ethylene plant, the answer is no. If you're asking are we going to stay in the wheelhouse we're in, the answer is yes.
Okay. Thanks. Unrelated one on the LPG For contract data that you disclosed today, so Slide 44, can we think of the contracts from 20 And earlier as kind of the higher priced legacy contracts that you still have. And then for the more recent contracts or the lighter blue bars, Any sense of where rates are on those? Are they pretty close to market overall?
I'd say, so I think that's a fair way to look at on those legacy contracts. I'm trying to get the slide.
Brad, jump in.
Yes, I
was going to say that is
a good way to think about it. I mean, as we think about expansions and how they're priced And the underlying economics of those relative to as those original contracts roll off, we price it At a market base rate, and I think we've stated in the past that we're going to stay aggressive and stay full on the export docs, and I think you'll see us continue to do that.
Great. Thank you.
The next question comes from Tristan Richardson with Tuohr Securities.
Hey, good afternoon guys. Just a question on the processing side. You noticed you noted in your presentation a diverse exposure Between public and private producer customers in the Permian. Can you elaborate on that a little bit? I think we're generally hearing comments out there that Private producers may be increasing activity at a higher rate than public peers, but can you elaborate there?
Is that consistent with what you're seeing The message you're talking about in the slide.
I think so that is consistent. I mean, We meet with obviously all these guys and I will just tell you that the public guys are they all are talking to party line And it doesn't feel like they are going to be active drilling. I know there's some outliers that some folks Kind of made statements in our earnings calls, but I'd say there is a party line for these Publicize that they are not going to be active this year. And on the privateize, you can just see what these I forget what the percent is, Natalie or Tony?
45%. 45%.
Yes. And so when you look at the percent of the pie that the private guys are Increasing and that percentage just seems to go up every week. They are taking a different approach in terms of Their activity level.
Thanks, Brett. And then just a follow-up. Randy, in the prepared comments, you talked about Evaluating repurchases through the lens of the free cash flow return opportunity, if consensus out there suggests that EPD units today represent a low to mid teens type of free cash flow yield opportunity. Can you frame that for us relative To the opportunities you're seeing out there for capital deployment, either inside the energy transition theme or not?
Yes. Tristan, because one, As far as the kind of types of returns on capital that we're seeing, we've over time, we said pretty much midstream projects. The bell curve Midstream projects are a 10% to 15% unlevered returns on capital. And then once you sort of get outside that bell curve, then that's where you can come in and See some better returns. And I think what we're looking at is sort of in that range.
And then as far as what we're obviously, what we're seeing On cash flow yields, as you cited, are sort of low double digit, low teen type returns. And Trista, I'll come back in and Chris mentioned it in his remarks. The cash yields that we did buybacks for, If you come back and if you look back over the last year and a half, have really been in that, call it, 11% to 18% Cash return on capital. And when we come back in and look at last year, with $200,000,000 of buyback last The returns obviously were a little bit higher with what we saw there in the Well, 2nd and third quarter just where the midstream sector was trading. And then one other thing I would add, And I think we and I've tried to allude to it on the webcast that aired this morning as far as our willingness to do buyback.
I think we've demonstrated that. We came back in. In fact, some materials that some banks provided gave us a little bit more context That when you come in and you look at U. S. Midstream companies in 2020, we represented 30% of the buyback volume That was done.
So I think we'll be there. We'll compare buybacks. We'll compare The organic growth capital opportunities that we have and we'll go from there. But we're I mean, we've I think we've demonstrated A willingness to come in and come in and do buybacks.
Very helpful. Thank you guys very much.
Our next question comes from Peter Salmon with Simmons Energy.
One moment.
My question today pertains to hydrogen. While recognizing that more meaningful hydrogen adoption is deeper into the future, Just curious if you're receiving inbound phone calls from either integrated oil companies or industrial gas companies or Some of the newer companies targeting the hydrogen market, just curious if they're seeking storage space to store hydrogen and or pipeline capacity to move hydrogen. So any color you can provide would be super helpful.
Yes, this is Jim. We got a call recently and we haven't met with them yet with a petrochemical company that's obviously looking at Some hydrogen projects and they need a pipeline storage company. And I don't know what the hell they're talking about we hadn't met with them yet, but we are going to meet with them.
Okay. Thank you, Jim. That's very helpful.
Our next question comes from Michael Lapides with Goldman Sachs.
Hey, guys. I actually have a couple of ones. So thank you for taking them. First of all, when you talk about transformational, Should we think of it that's kind of a big word, right? Should we think of it as transformational, meaning midstream related, But something that is not just, hey, I'm buying a $200,000,000 asset type thing or is it something that's kind of outside the Traditional midstream sphere?
I think it's outside the box. Okay.
How do you think about your equity currency as a source of capital To utilize to do a sizable transformational change?
I don't know about you, though. I don't think much of it.
Yes. Michael, I think some of the things that we're looking at, I mean, we would not need to do equity financing.
Got it.
Yes. I mean, the way we look at equity, it's prohibitively expensive And somewhat scarce.
Got it. Okay. So it's something you could either finance with cash flow or finance by Is there a cap on the amount of leverage you're willing to go to do a transformational acquisition?
Michael, I mean, we the investment grade metrics are very important to us. And we Frankly, that's one of the things we retain a lot of financial flexibility with keeping leverage in that 3.5 times area. That gives us a lot of leverage that you could make a sizable acquisition if we wanted to go that way And come in and frankly do it for cash and not be above 4 times.
Got it. Yes, sure. You have a ton of balance sheet capacity, a massive amount. Okay, super helpful. One last one.
You gave a lot of Detail about how much of your Delaware G and P is on take or pay. Can you talk about the rest of your processing, Right. Your Permian is just one piece. How much of the rest of your processing is on take or pay?
Not as much as we'd like. But a lot of the newer Contracts that we get into, we have a we typically try to do a take or pay, although acreage dedications have become very popular this year. Obviously, up in the Rockies, those are legacy a lot of those are life of lease legacy contracts that aren't necessarily they may have a fee base to them. Gulf of Mexico has some key pole type contracts, but they have some of them have a floor. So Permian is really probably one of the basins that we have the richest take or pay flat fee based type contracts That we really like and we like to see all basins At that level, but some of them are legacy and that's where they stand.
Got it. Thank you, guys. Much appreciated.
When you do acreage dedications, I mean, it depends there are some good things about acreage dedication.
There's great things about acreage dedication.
At least if they produce, you're going to get it.
That's right.
And the other thing is, if you put in there that, hey, I get the first $100,000,000 or $200,000,000 You've really improved your lie even though you call it an acreage dedication.
Right. We do a lot of first dedications. I mean, we get the first X out of this area. Tony's team, our fundamentals team does a really good job of validating producer curves in the rock. So we do a lot of homework before we just go sign acreage dedications in specific basins up, but it needs to be a basin that we like and that We're confident that we'll be around for a
while. Got it. Much appreciated. Thank you.
Our next question comes from Christine Cho with Barclays.
Hi. So actually, if I could also I'll tack on a question about the Delaware G and P portfolio. The slide indicates that the private producers are the ones who are contracted through acreage dedications. And so if these are the folks that are actually increasing activity while the Public players are being more disciplined. Would this imply that this is where upside to cash flow could materialize this year?
I'm also assuming that it's any liquids that come out of the plants, you'd also be taking it all the way downstream, But if you could confirm that.
Yes, you're right. Any gas that we gather and process is Enterprise pipelines and fractionators. And you're absolutely right. These guys that we've exposed ourselves to on acreage dedications Our drilling and we meet with them pretty often. We're rooting for them.
But the same thing goes there though. We look at the rock and a lot of We've done a really good job to make sure there's not a whole lot of capital spend to even get to them. So really short lays of pipe and maybe just a meter.
And if you could also, I mean, what are the producers doing with respect to hedging like the private players? Just because the curve is so backward dated, so are you seeing them hedge at all? Or is it really nothing?
Christine, this is Tony. It's really hard to know what the privates are doing. But Yes. They are in the markets, in the capital markets at all. What we hear from them is they are hedging a substantial portion of it Out for 3 years.
If they're PE backed, they're probably hedging.
If they're PE backed, they're probably hedging. And frankly, The curve probably tells them kind of profitability there is. These kind of numbers, they ought to hedge. So we think we connect those dots and that's probably what they're doing.
Okay. And then if I could also then move over to the Midland to ECHO capacity slide. You have a line here for optimal capacity and then another for max capacity and appreciate you've contracted Over 90% off the optimal line. But to get from optimal to max, I'm assuming that's done with more pumps or DRA. And I'm guessing the marginal cost goes up when you do that.
So how do we think about what the spreads or the fees need to be for it to make sense to increase to that level? Am I correct in thinking that the fee needs to be higher than what the current contracted REIT is?
This is Brad Motal. It's kind of difficult to answer that question because we operate those 3 pipelines as one and as we get different volume profiles from Of our underlying contracts, that kind of changes the fee structure or the cost across the pipes. I'll tell you, you hit the nail on the head right out of the gate. It's DRA and additional horsepower to get to that peak Peak throughput, that 1,200,000 barrels is kind of that's where the price for any incremental barrel across any one of those three pipes starts to creep up, but it's hard to explain that when it really depends on the Contract mix at that given time.
This is Brent. I'll just add, look, we have a graph and we can tell you to the penny What barrel $1,000,000 to $1,500,000 cost us to move. And so we look at that every single day. And if there's economics to move the barrel, then that barrel gets moved. So obviously, as that pump curve Goes up, the costs go up and you're right, it's DRA and it's running pumps harder and it's Those are the things that we're looking at on the expense side.
DRA is not cheap.
Okay. And then I guess just given the overcapacity in the Permian, what would make you feel like you have the opportunity to go to the max capacity levels?
Something materially would have to change for that spread to widen out and whether that's some pipeline or pipelines get repurposed Or whether these guys go back in the basin in a big way and start drilling, but it's hard for me to See a point in time anytime soon where that does happen.
Okay. Just wanted to make sure. Okay, great. Thank you.
Our next question comes from Tim Schneider with Citi.
Hey, good afternoon and thanks For all the information. 2 part question here. First of all, look, I think a couple of the buzzwords that we heard, Transformational. And then Jim, I think you just said outside the box. How do we think about enterprise 5 years from now.
And I'm not looking for numbers, guidance or anything like that. Just it seems like it's a continued shift away from the wellhead. So how would you kind of describe Tim, I've already made myself a note never to say transformational and never to say outside the box again.
I think you're going to see us continuing to do what we've always done in my mind. We're going to Continue with this midstream model. More of that midstream model may be directed at petrochemicals, but we're not going to lose sight of where it all starts, Which is at the wellhead. So I don't know, you probably just see us getting a little bigger in what we do, we think. And
I mean, you're not
going to see us producing polyethylene or polypropylene and it well, I guess you said never say never, right? Not in my lifetime, which could mean 5 years from now.
Got it. And then maybe as A follow-up to that, as I and the reason I'm asking this is because it's come up on calls with some of your peers. Does this and I don't want to say transformational, not going to use it, but does this shift have any impact on your structure down the road, right? And then what I'm specifically referring to is obviously as Bellwether here, a shift potentially to a C Corp. It sounds like you guys have a lot more CapEx Some of your peers, which could help on the taxes side.
How do you guys think about that, especially if it is attracting A little bit more of a newer investor base that's looking at infrastructure in general.
Okay. Yes, Tim, I think within enterprises and MLP, we have a great deal of flexibility. First, treasury came in over a 2 year time period And revisited the definition of qualified earnings, I want to say that was probably 2017, 2018 and frankly came in and when they came back in to review the definition broadened The definition as a result and if anything, and again, Jim said never say How far we would go in the petchem side, but frankly that gave Westlake more flexibility and Williams at the time more Flexibility with some of their petrochemical operations that they have. So that is qualified earnings under In the 7704 when you come in and then if you look at how large we are and what our Gross margin is MLPs are allowed to have up to 10% of their gross margin be non qualified Type activities. And you never want to get near the 10%, but still even if we were 5% in that type number, That is a big number as far as what the implied EBITDA or gross operating margin would be associated with those non qualified earnings.
Yes. Everything we're looking at doing was falls under it's qualified earnings. Everything. Which is and I want to be careful because we might have customers on the line. We have no intention to go and beyond primary petrochemicals.
Okay, got it. But I mean, how do you look at the structure though in terms of just attracting a much larger pool of capital as a potential C Corp versus MLP, given your size especially?
Tim, I think that's still a function of Where is the equity market appetite For the energy sector at the macro level. And I've come in and When you come in and you look at how we've traded, how the midstream is traded, we really trade in parallel With the XLE, with the S and P Energy sector. Now, we have a better return than that Sector, because but we really trade in step with that. Certainly, you've seen that Since the election in November, you've seen the rally in XLE, you've seen the rally in midstream and you've seen the rally in enterprise. But as far as Doing a capital raise, I think some of the activity that we saw in 2020 That, a really popular C Corp had to come in and pay a big discount to last trade Just to get $1,000,000,000 done and I don't know if that's that much deeper of an equity market than what we have In the equity markets.
So again, I think a lot of it just comes back into how attractive is the energy sector Macro to the Equity Capital Markets.
Okay, got it. Thank you, guys.
Our next question comes from Ujjwal Pradhan with Bank of America.
Good
afternoon, everyone. I appreciate all the color you have provided so far today. Wanted to first ask on CapEx. In your presentation this morning, you had talked about potentially sanctioning energy evolution type of projects in 2021. And I think previously you had mentioned 2021 CapEx could move from the current $1,200,000,000 up to 2,000,000,000 Is that going to be contingent on the size of discretionary free cash flow this year or independent of it?
No. As far as the size of our CapEx program, whether it's again, we try to book bookings on it Between $1,600,000,000 $2,000,000,000 really that's independent of where our Discretionary cash flow is. It really that just really came in to the timing of projects that are in the developmental phase.
Got it. Thanks for carrying that. And second question on the ESG presentation from yesterday. You shared EPD's achievements in terms of emissions reduction CO2 emissions reduction per BOE, But we did not see any specific targets. Is there additional thoughts you could share on how much The reduction you could achieve and whether carbon dioxide sequestration could be part of that, Maybe as part of your Burek business or through partnerships or maybe even purchase of carbon dioxide offset credits like some other energy peers have done?
Okay. Let me try to take the first part of that. And then on the carbon sequestration, I guess, Graeme, we'll pick up on that. We've not set any objectives or the objective that we set On lowering emissions and emissions intensity is really that they're economic. So we didn't want to come out there and put Initial number out there, our view is let's do it economically where it makes sense for everyone.
And so I mean, That's what we're focused on. So at this point in time, we've not put a subjective goal out there.
As far as the sequestration, we're looking at we do evaluate projects at this point. We don't have anything We developed in terms of sequestration. We continue to evaluate the technology and monitor advances in technology. There's a few smaller areas where we're looking at some CO2 capture Sure, for other industrial uses, but at this point, that's relatively minor area, but one we continue to work at and develop and look for opportunities that might be right. Lisa might be right.
Got it. Thank you, Doug.
And I will say, we are there are a couple of initiatives that we're working on this year that We'd come in and both accomplish lower emissions and emissions intensity. We just need to get progress a little bit further on that.
Thanks for that. Very helpful. And maybe a quick one on your crude exports business. You had the helpful summary slide on LPG export contracts on Page 44. Could you discuss your latest contract profile for your crude exports business as well?
Hi, this is Brad Motal again. I think I show on Page 23, I apologize. I think you've asked a lot of different page number, but we're contracted out Through 2023, we've got a pretty good portfolio of long range agreements. So in near term, We're looking pretty good.
Got it. Thanks for all the answers.
Our next question comes from Steve Siegel with Siegel Asset Management Partners.
Good afternoon, everybody. Just a quick question. Given the power outages in February, will that impact How you guys any changes in terms of operations or how you contract for power going forward?
I think one of the things we'll look at obviously in the Texas Power markets, there's a lot of a lot up in the air right now from how ERCOT responds, Potential legislative action, we'll have to watch that and see exactly how we respond to that and how that might impact our contract Mix as far as the power goes.
And operationally, any impact or And any tweaks that you might make given
the power?
From an operational impact, it was Really the operational impacts were all driven by price and not reliability in terms of our use of electrical power.
Great. All right. Thank you.
Our next question comes from Michael Castamena with Heikkinen Energy.
Hi. Good afternoon, everyone. I wanted to go back to the Permian and the asset optimizations that you all are talking about. In terms of timeline, Do you see us having to wait for MVCs to roll off over the next 3 to 5 years for midstream operators Forced to do something? Or do you think there's more proactive projects that we could see over the next year or 2 that could improve that environment?
I mean, I think as these contracts roll off, People are going
to have
to take a hard look at their assets and we've done it on some of our assets that Natalie alluded to and figure out whether They are truly profitable assets or whether they need to be in some other service.
Or somebody else's hand.
Right. Or can somebody else do something else with it that the person that owns it right now can't. So I mean, in my personal opinion, it's going to take time for this whole thing to shake out. But you can look at what pipelines are flowing or what plants are flowing or most cases not flowing and figure out Who's exposed in this environment?
Got it. And then maybe staying there,
you said that it could
be more valuable in someone else's hands. We've seen some activity in M and A With GMP business maybe catching a bid to fill more downstream assets, is that something that you see Like a trend continuing as maybe there's less growth at the upstream level than what we expected a year or 2 ago?
I think you're talking about Energy Transfer and Enable?
Yes, sir.
Yes, that's a good question. We've looked at Should we do something like that? And frankly, at this point, what we believe is that Our downstream system is a pretty good magnet for getting product in our pipelines upstream. And price matters. I'm not going to say we won't do it, but we won't do it at what these people expect to get today.
Sure. Yes, that's helpful. Okay. And then if I could ask one more on Seaway specifically, I appreciate the details you all laid out in the slide. But I guess, could you provide, I guess, your high level expectation on Canadian production or maybe what you're hearing from your partner in that Pipeline.
And then a couple more specific questions, follow-up.
This is Tony. It's hard to make a case at this point that Canadian production is going to go down Even with the Keystone XL ruling. Yes, pipelines incrementally to take more of that production away They're getting tougher. Clearly, that bar continues to get raised. But don't forget that Canadians are masters who are taking crude out by rail if They need to.
So and these kind of numbers, their economics are very good. Their economics are good for growth. And it's in the hands of people at this point that that's what they do. That's their sandbox. So It's not a they're not huge numbers, but it's hard to make a case those numbers are going to go down.
Got it. And then specifically on the slide, you all said that there's a 90% utilization on that 950. Yes, I found the heavy volume increasing over time interesting. Is that should we expect 90% utilization today and then it's just the shift Moving to heavy as Canadian production grows, is that the right way to read that slide?
Yes, that's fair. The Canadian this is Doug Hanley speaking. The Canadian or heavy has offset some of the throughput that we lost on light. So it's backfilling it. You just got to think about how much capacity that there's out of the Permian Basin going to Houston or going to Corpus and historically the pipelines that deliver a lot of those Light barrels into Cushing were a Midland origin and that movement just It's just unnecessary now.
Our next question comes from Shneur Gershuni with UBS.
Hi, good afternoon, everyone. Most of my questions have been asked and I just wanted to return back to the buyback question for a second. Have there been any thoughts or discussions around returning to the target that you had for 2020 about 2% of CFFO being directed towards buybacks or even potentially a higher number? Or is it really just going to be market dependent as to how things flow for this year?
Yes. Shneur, this is Randy. Look, I just want a seafood platter off Burkhalter.
Say from where?
Yes. Jameer, we really came into this year not setting a target intentionally and a little bit what we talked about on Our earnings call for Q4 that really we wanted to come in and see how this year developed, certainly the first Half of this year because it could go several different ways. We've really been encouraged with what we've seen as far as Just I think broad economy and what we're seeing from
just If
you would, GDP and some of the prospects for GDP, certainly where commodity prices have been, getting off to a better start this year, But really wanted to come in and save that for a little bit later in the year before we come in and try to provide any kind of Update as far as what our thinking is this year.
That makes perfect sense and happy that I got you a free Yes, platter of seafood. Maybe as a quick follow-up question. I was just wondering if you can talk about the potential working capital release that you sort of talked about earlier in the prepared remarks earlier today. I mean, what kind of Scale and size should we be thinking about in terms of the working capital release?
Yes, Shneur, this is Chris Dally. As we talked about during the Q4 earnings call, we had about $750,000,000 $800,000,000 Working capital utilized in 2020. And again, as we talked about and we mentioned earlier that we get to the back half of twenty twenty one, we'll be more in a discretionary free cash flow positive area. So I think that's when you could probably assume that we see a lot of that working capital come back towards us. But again, it is going to be dependent upon markets because We are able to we look at those opportunities on a day in and day out basis and we're able to shift that working capital around as necessary because Generally, before using that working capital, it has very high margins associated with it.
That makes perfect sense. And hopefully, Chris, I won you a platter as well too. No luck there. Thank you very much guys. Really appreciate the color today and thanks for the update.
The next question is a follow-up question from Jeremy Tonet with JPMorgan.
Hi, good afternoon. You spoke a good deal amount about the world's need for LPG imports in Asia. And I was just wondering What that means for the U. S? Why how much export capacity LPG export capacity will be needed over Any sense on scale, timing and enterprises, I guess, large role in that?
We've got an expansion sitting on the shelf, if I'm not mistaken, Bob. Yes, sir. That's correct. We haven't pulled the trigger on it. I will say our LPG export stayed pretty much full all Through this past year in the midst of a pandemic, yes, I really think so.
It probably depends on production growth, doesn't it, Yes, anything?
This is Brent. We enterprise and a bunch of companies We're traveling all over the world showing what the production forecast was going to be from United States. And Tony was out there saying this is what's going to happen and there Another producer right behind us saying this is what was going to happen. And so if you looked, there was a lot of investment made overseas For what was going to happen over here. So from a demand side, I think a lot of our customers frankly are trying to figure out Where all the NGLs are going to come from because they need them.
And, Kees, this is Tony. I'll add You already see that in the relationship between LPG and crude and how it's moved up. And that's how bad they want it and need it.
Got it. Does that make sense?
This is Bob Sanders. It doesn't necessarily have to be an expansion that we make. The Port of Houston has got an approved word of project to expand the width of the Houston Ship Channel, Which will allow for incremental vessels to come in, so you can increase the efficiency of the assets you've got.
Got it. That's helpful. Thanks. And maybe just kind of a housekeeping question for Analyst Day. Wondering for your overall business, what level of take or pay Does EBITDA represent now any ballpark figures there?
And just EBITDA breakdown by basin, just trying to get broad strokes of how Enterprise stands these days?
Jeremy, I tell you what, we'll follow back up with you because we We have that number in a slide deck that we did in March a year ago. And I'm just drawing a blank right now as far as what it is. I'll follow-up with you, Jeremy. This is Randy for a call.
Got it. I'll stop there. Thank you.
Thank you.
Our next question comes from Becca Followill with U. S. Capital Advisors.
One big picture, one minutia. On your ESG Day yesterday, appreciate all the comments there. One area where I've asked before is just on the G portion that you don't have an elected Board. Do you have any thoughts on potentially transitioning
This is Jim, and I think no. And secondly, I think we have as good a governance as Anybody in the business and when your GP owns 32% of the common units, that's called alignment and good governance.
Well, that was emphatic. Thank you. And the second one is on NGL inventories. When I look on your balance sheet, you got about 1 point $1,000,000,000 of NGL and inventories versus $840,000,000 in the second quarter. So I assume part of that was because of just the build with the hurricanes.
But was part of it just building an anticipation maybe in a run up of NGL prices where you guys might get some windfall this year on that?
If we had that much, we had it so forward, Becca. We're not going to build inventory and take price risk. Is that right, Brent? That's correct.
And then the last one is, do you guys have the technical ability when we have disruptions like we had a couple of weeks ago to sell Ethane in the market is methane?
We have a lot of technical ability, Becca.
Okay. But do you have the ability to sell ethane as methane?
To some extent.
Okay, perfect. Thank you, guys.
Hey, Becca. One thing I will add on the governance deal. We went back in and looked at Magellan's ownership And before Buckeye announced their strategic alternatives and we looked at their ownership, and they had Independently elected directors for quite a few years, 10, 15 years. And really our ownership and their ownership, probably there was 85%, 90% overlap With their top 20 investors and our top 20 investors. So it doesn't appear that governance or MLP structure, Certainly, the governance piece of it is making any kind of difference as far as ownership goes, just when we look At that group.
That's fair. Becca, you see who gives the soft answer and who gives the hard answer.
Well, both are valuable. Thank you.
All right. Kevin, this is Randy. With that, I think we will That conclude our call today. And we'd like to thank our participants for your interest, for Dialing in for our ESG Day and Analyst Day and followed up with Q and A, and we're hoping maybe next year we can do this in person. So again, thank you, and that concludes our call today.
Have a good day. Goodbye now.
Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.