Greetings, and welcome to Energy Transfer Second Quarter Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tom Long, Chief Financial Officer.
Thank you. You may begin.
Thank you, operator. Good afternoon, everyone, and welcome to the Energy Transfer Second Quarter 2021 Earnings Call, And thank you for joining us today. I'm also joined today by Mackie McCree and other members of our senior management team who are here to help answer your questions after our prepared remarks. Hopefully, you saw our press release we issued earlier this afternoon as well as the slides posted to our Web As a reminder, we will be making forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements are based on our current beliefs as well as certain assumptions and information currently available to us and are discussed in more detail in our quarterly report on Form 10 Q for the quarter ended June 30, 2021, which we expect to be filed this Thursday, August 5.
I'll also refer to adjusted EBITDA and distributable cash flow or DCF, all of which are non GAAP financial measures. You'll find a reconciliation of our non GAAP measures on our website. I'd like to start today by looking at some of our second quarter highlights. We generated adjusted EBITDA of $2,600,000,000 And DCF attributable to the partners of ET as adjusted of $1,400,000,000 Our excess cash flow after distributions was approximately $980,000,000 On an incurred basis, We had excess DCF of approximately $625,000,000 after distributions of $414,000,000 And growth capital of approximately $355,000,000 The increased results over the Q2 of 2020 We're primarily due to higher earnings in the Midstream, Intrastate and NGL and Refined Products segments. Switching gears to an update on the acquisition of Enable Midstream Partners, which will provide increased scale In the Mid Continent and Arkla Tex regions and improved connectivity for our natural gas and NGL transportation customers.
In May, the acquisition was approved by Enable unitholders and the only remaining condition to closing is obtaining HSR clearance. The FTC has issued requests for additional information and documentary material, commonly known as second request, which extended the HSR waiting period. Energy Transfer and Enable are working diligently to Provide the relevant information to the FTC and have engaged in constructive dialogue with them throughout this process. We continue to believe that the FTC will grant unconditional clearance of the transaction and that we will close the transaction in the second half of twenty twenty one. I'll now walk you through recent developments on our major growth projects, and we'll start with our Cushing to Needle and pipeline.
In early June, we commenced joint tariff service to provide crude oil transportation from our Cushing terminal to our Needle and Terminal. This project also provides the capability to deliver Powder River and DJ Basin barrels to our Nederland terminal via an upstream connection With our White Cliffs pipeline, we are now capable of transporting approximately 65,000 barrels per day of oil from the DJ Basin and Cushing area to Nederland, and we are seeing a steady growth in volumes. The first phase of this project is fully contracted with large majority of those contracts coming from 3rd party shippers. In addition to customer demand, We are moving forward with Phase 2 of this project, which will increase the capacity to 120,000 barrels per day. Phase 2 is expected to be in service in the Q1 of 2022 and is underpinned by 3rd party commitments.
Minimal capital spend is required for this project. Next, construction of the Ted Collins link is progressing, and we continue to expect to be in service in the Q4 of 2021. Upon initial completion, this project will provide crude oil transportation Up to 150,000 barrels per day from West Texas in Nederland to our Houston terminal, which can be expanded to 300,000 barrels per day. Now looking to Dakota Access. In May, the DC District Court denied the plaintiff's motion for an injunction to shut down Dakota Access and thereafter dismissed the plaintiff's lawsuit against the Army Corps.
We continue to cooperate with the Army Corps in their preparation of the environmental impact statement. We recently placed the next phase of incremental capacity for the Bakken pipeline optimization project into service, which is supported by minimum volume commitments from long term customers. With completion of this phase of the optimization, Dakota Access now has the ability to flow approximately 750,000 barrels per day. Let's take a look at Mariner East System. Q2 2021 NGL volumes through the Mariner East Pipeline Increased approximately 15% over the Q2 of 2020.
Our Pennsylvania Access project, which will allow refined products to flow from the Midwest supply regions into Pennsylvania, New York and other markets in the Northeast Is ready for service when markets dictate. We now expect the next significant phase of the Mariner East projects to be in service in the Q3 of 20 21 and the final phase of the Marinara East pipeline is expected to be completed in the Q4 of 2021. Today, we are seeing demand exceed our current throughput capacity, which will allow us to begin utilizing additional capacity as our next phase of Mariner East It's brought online later this year. Now a brief update on our Needle and Terminal. During the Q2, we completed the remaining expansions of our LPG facilities at Nederland.
With the addition Of our LPG and ethane expansions completed in late 2020 early 2021, we are now capable of exporting approximately 700,000 barrels per day of NGLs from our Newland terminal. And when combined with our export capabilities from our Marcus Hook terminal As well as our Mariner West pipeline, which exports more than 55,000 barrels per day of ethane to Canada, Our total NGL export capacity is now over 1,100,000 barrels per day, which is among the largest in the world. In fact, in May June, we exported more NGLs than any other company or country in the world with our daily throughput averaging over 850,000 barrels per day in June. We see an increasing need for products in markets beyond North America, and we are striving to meet this need with our growing export business. At our expanded Needle and Terminal, Volumes have continued to increase throughout the first half of this year and we expect them to continue to increase throughout the remainder of 2021.
And export volumes under our Orbit ethane export joint venture have seen strong growth. Through June, we loaded more than 9,000,000 barrels of ethane out of this facility since placing it into service. Our Permian Bridge project, which will connect our gathering and processing assets in the Delaware Basin with our G and P assets in the Midland Basin is expected to be completed in the Q4 2021. This project will allow us to move approximately 115,000 Mcf per day of rich gas Out of the Midland Basin and operate existing capacity more efficiently, while also providing access to additional takeaway options. This project is a good example of how we can preserve capital spend as we strategically look for ways to optimize, Repurpose and expand our assets to provide us with competitive advantages.
Lastly, in July, we announced the signing Memorandum of Understanding with Republic of Panama to study the feasibility of jointly developing a proposed Trans Panama Gateway Pipeline. The project would include terminals on the Pacific and Atlantic side of Panama to be connected by a pipeline for the receipt, Transportation and export of LPGs to international markets. This project would provide relief for the increasing traffic of VLGCs through the Panama Canal and provide high volume specific loading optionality for customers in Asia. Now for an update on our alternative energy activities. Since we announced the creation of an alternative energy group in February, We have continued to focus on renewable energy projects.
In this regard, we have finalized a second long term power purchase agreement For 120 Megawatts of solar power that we expect to sign after receipt of regulatory approval. We are also continuing to explore several opportunities for solar and wind projects on our existing acreage in the Northeast And recently signed an agreement with a large utility company to jointly pursue solar and wind development on an energy transport tract in Kentucky. On the carbon capture front, our Marcus Hook project continues to look promising based on preliminary cost estimates and design feasibility studies. This project would involve capturing CO2 from the flue gas and delivering it to customers who would produce food grade CO2. We're also pursuing 2 carbon projects near our systems, one involving the capture of CO2 from processing plants for use in enhanced oil recovery and the second for a carbon utilization project.
We're also reviewing potential equity investments in a variety of projects, including biogas and biodiesel projects that would qualify for low carbon fuel credits as long as they satisfy our economic return criteria. Our engineering and operations teams We are constantly working to explore ways to reduce emissions across our facilities. And as we've discussed previously, Our dual drive compressors continue to win environmental awards for reducing CO2 emissions by utilizing their ability to run off electric power as well as natural gas. An important distinction for our dual drive compressors versus all electric compressors is that dual drive helps grid reliability as electric demand can be volatile, especially in some remote areas of operation. In addition, we have significantly ramped up our exports Butane, propane and ethane for power generation there in many cases displaces diesel, wood and animal waste, naphtha and other fuels, which provide for a significant reduction of CO2 emissions.
Finally, we expect to publish ESG data on the Energy Infrastructure Council and GPA Midstream ESG template in the near future. And we're also continuing to address various inaccuracies Now let's take a closer look at our 2nd quarter results. Consolidated adjusted EBITDA was $2,600,000,000 compared to $2,400,000,000 for the Q2 2020. DCF attributable to the partners as adjusted was $1,400,000,000 for the 2nd quarter compared to $1,300,000,000 for the Q2 of 2020. The increased results were primarily driven by improved earnings in the Midstream, intrastate, NGL and Refined Products segments.
On July 22, we announced a quarterly cash distribution of $0.155 per common unit or $0.61 on an annualized basis. This distribution will be paid on August 19 to unitholders of record as of the close of business on August 6. Turning to our results by segment. We'll start with the NGL Refined Products segment. Our adjusted EBITDA was $736,000,000 compared to $674,000,000 the same period last year.
This was primarily due to higher export volumes feeding our needle in terminal, increased throughput on our Mariner East pipeline And at our Marcus Hook terminal as well as increased storage and fractionation and refinery services margin. NGL transportation volumes on our wholly owned and joint venture pipelines increased to 1,700,000 barrels per day compared to 1,400,000 barrels per day for the same period last year. This increase was primarily due to increased export volumes Heading into our needling terminal from the initiation of service on our propane and ethane export projects as well as increased volumes on our Mariner East pipeline system. On our fractionators, average fractionated volumes was 8 33,000 barrels per day compared to 836,000 barrels per day for the Q2 of 2020. Since the end of the second quarter, transportation and fractionation volumes have continued to increase.
For our crude oil segment, adjusted EBITDA was $484,000,000 compared to $519,000,000 for the same period last year. This was primarily due to lower average tariff rates on our Texas crude oil pipeline system as well as decrease in our crude oil acquisition and marketing business. We did see higher volumes on our Bakken and Bayou Bridge pipelines, which have improved from the lows of last year. We have now seen the majority of the major contract roll offs on our Permian Express system and will look to capture better margins going forward as the market improves. For Midstream, adjusted EBITDA was $477,000,000 compared to $367,000,000 for the Q2 of 2020.
This was largely the result of favorable NGL and natural gas prices as well as volume growth across most of our regions and the ramp up of recently completed assets in the Northeast. Gathered gas volumes were 13,100,000 MMBtus per day compared to 13,000,000 MMBtus per day The same period last year due to higher volumes in the Permian, Arklatex, South and North Texas regions as they continue to improve from lows seen last year. Permian Basin volumes have remained strong And Midland inlet volumes continue to be at or near record highs. In our interstate Segment adjusted EBITDA was $331,000,000 compared to $403,000,000 for the Q2 of 2020, primarily due to contract expirations on Tiger and FEP as well as a shipper bankruptcy on Tiger, partially offset by an increase in transported volumes on Rover. And for our intrastate segment, adjusted EBITDA was $224,000,000 compared to $187,000,000 in the Q2 of last year.
This was primarily due to demand volume ramp ups in the Permian and an increase in retained fuel revenues as well as a $39,000,000 increase from revenues related to Winter Storm Yuri. There is no doubt that Yuri We created much more demand for our pipeline and storage network, and we are seeing this reflected in incoming calls and discussions with existing and new customers who are looking to lock in firm transport and or storage agreements. Now turning to our 2021 adjusted EBITDA guidance. We continue to expect our full year adjusted EBITDA to be between $12,900,000,000 The $13,300,000,000 excluding any contribution from the announced Enable acquisition. And moving to a growth capital update, for the 6 months ended June 30, 2021, Energy Transfer spent $715,000,000 organic growth projects, primarily in the NGL and Refined Products segment, excluding SUN and USA Compression CapEx.
For full year 2021, we continue to expect growth capital expenditures to be approximately $1,600,000,000 primarily in the NGL and Refined Products, Midstream and Crude Oil segments. We continue to focus on aligning capital outlay with customer needs and remain disciplined in regard to all spending. Any new projects are primarily expected to be focused on improving optionality around our existing And for 20222023, we continue to expect spend of approximately 500 $700,000,000 per year. Now looking briefly at our liquidity position. As of June 30, 2021, Total available liquidity under our revolving credit facility was approximately $5,000,000,000 and our leverage ratio was 3.14 for our credit facility.
During the Q2, we utilized cash from operations and proceeds from a $900,000,000 Series H preferred unit offering to reduce our outstanding debt by approximately 1,500,000,000 And year to date, we have reduced our long term debt by $5,200,000,000 And in May of this year, S and P and Moody's affirmed our credit ratings of BBB- and BAA3, respectively, and both revised our outlook to stable from negative. In addition, in April, we removed a layer During the Q2, we continue to see improved fundamentals and the completion of our NGL expansions at Nederland has positioned us As one of the leading exporters of NGLs in the world, we expect our LPG and ethane export projects at our Nederland terminal To further ramp up throughout the rest of this year, capital discipline and deleveraging continue to be among our top priorities, and we continued to pay down debt In the Q2, we remain committed to maintaining and improving our investment grade rating. And we will look to return additional capital to unitholders in the form of unit buybacks and or distribution increases with the mix dependent upon our analysis of market conditions at the time. We also continue to explore development of alternative energy projects and opportunities to reduce our environmental footprint, some of which are looking very promising, and we hope to be announcing additional projects shortly.
Operator, please open the line up for our first question.
Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer A confirmation tone will indicate your line is in the question Our first question comes from the line of Shneur Gershuni With UBS, please proceed with your question.
Hi, good afternoon, everyone. Maybe to start off, just given all the comments About capital allocation and so forth. When I sort of think about your guidance for this year, all the debt that paid off during the most recent quarter, the recent preferred offering as well too. It sort of suggests that you would be below your 4.5 target for leverage in the 3rd or Q4 of What are your priorities in terms of returning capital to unitholders? Just sort of looking at current trading levels, Does buybacks become the priority or is there some other things that you're considering?
Good afternoon. Shanu, I definitely appreciate the question here. As you know, we've got the 4 different options that we look at. We're Very excited that we've been able to pay off as much as we have this year with the $5,200,000,000 We're still not providing guidance as to exactly timing From that standpoint, but I will say that the debt has clearly been our focus at this point. But I will say the distribution and or unit buybacks as well as the CapEx, we're going to continue to look at it from an economic standpoint as to what makes sense.
But It's great to be in this position and have this question right now. So keep in mind that not putting it in any one order, but we've clearly had the debt as the top And we've made great progress on that. So you can appreciate the distribution and unit buyback as we worked diligently to Stay very disciplined on the CapEx front.
That makes sense. And maybe that's a good transition to my follow-up question. You've sort of maintained the growth capital outlook for both 2022 and 2023 at $500,000,000 to $700,000,000 per year. I recognize that a lot of that is kind of in the FID bucket already. Kind of interested in the sort of the discussion you In your prepared remarks, you had talked about a bunch of different carbon capture projects that you were looking at, some with sequestration, some with enhanced oil recovery and so forth.
Are those projects also included in kind of that outlook that you have for the next 2 years in CapEx? If not, do you have a sense around the price tag On that and so and how we could think it could potentially move as you move to FID on those types of projects?
Yes, Shneur. This is Mackie. As we have expressed and as Tom Mason and his team are leading, we're looking at a lot of stuff around ESG. And as we have said, anything that makes Economic sense on rates of return, we're going to pursue it. Right now, there's really nothing on the horizon that has any kind of significant material Capital cost to it that we're looking at in any serious way.
For example, we've made the announcements on the solar front where really we're not investing anything. We're just a Buyer of inexpensive electricity. Some of these other carbon capture projects that we're looking at aren't going to require a lot of capital And or the partner that we're teaming up with will provide more of the capital. So right now, we don't have really anything in there materially and We even have a little bit of a cushion to help grow our midstream business as these rigs begin and have Started moving in and as part of gathering opportunities and things like that. So no, we don't have much in there at all from a cost standpoint for
Okay. Really appreciate it. I'll respect the 2 questions, but I have a ton more, so I'll jump back in the queue. Thank you and have a great afternoon.
Our next question comes from the line of Jean Ann Salisbury with Bernstein. Please proceed with your question.
Hi. With the DAPL expansion being up, are you seeing or expecting more flows? Or since there's excess pipeline out of the Bakken, Should we think of it more like new MVCs will start so you'll get paid, but we may not see the flows right away?
This is Mackie again. Yes, we have seen for August a significant increase in nominations and we're seeing the flows begin. And also, yes, to your question around NBCs, the NBCs on the optimization commitment did kick in August 1st.
Perfect. Thanks. And then as you noted, the Interstate segment was down sequentially due to contract expirations on Tiger and Fayetteville Materially. Is that kind of the end of the original contracts? I think maybe there's a little there's one more in Pay It Bill Express next year.
But for this year, Is there any more exploration coming in the back half or is this kind of the new base?
We're seeing the bottoms. As you mentioned, there's one small one FPP next year or the end of this year, but we're kind of 10 years passed by pretty quickly And we are, we are, but we're seeing so much growth around some of these pipelines in North Louisiana and excited about being able to move a lot of that gas Really both ways, but also adding back into Texas into our intrastate system. So we believe we've seen the bottom of the barrel there and we'll see more growth. A quick example around intrastates. We recently have sold out the vast majority of our capacity from West Texas to California through our TW system for the next 2 years at max tariff rate, not sure why.
We had a company come in that believes The value for gas in California must be going way up. So we're seeing some positives and we said that a while around the Transwestern well Where when contracts roll off, we actually add new contracts at higher fees. So there are some pluses. Also, the interstate is more Seasonal, this is not a the second quarter is not a high throughput necessarily for our intrastate system, but We do pretty much see upside from it.
Great. Thanks so much.
Our next question comes from the line of Keith Stanley with Wolfe Research. Please proceed with your question.
Hi, good afternoon. Maybe I could follow-up on Enable some. Just on feedback and questions you've gotten from the FTC, has anything been surprising to date or has the process been as expected? And Just want to confirm next steps in the process. It sounds like you still have to respond to their second request.
Is that right?
Yes, this is Mackie again. That's correct. We are responding to their second request. We're a little We thought that after extending it 30 more days from the initial 30 days that we would resolve all their questions and issues, But we remain confident that we will be closing in the not too distant future and we've been and we'll continue to be very cooperative With FTC and feel real good about getting the finish line sooner than later.
Great. Separate questions, just on the crude segment. So crude EBITDA was down year over year, And that's from the Q2 of 'twenty. You mentioned you're hoping things are kind of close or I guess should we think of this as Close to a bottom for that segment. I think there was a reference to the majority of the contracts now rolling off.
So should we think of EBITDA and crude as bottoming? And is there anything that Can kind of turn that segment around?
Yes, this is Mackie again. Well, actually the segment has been turned around. We give you an example On majority of our pipelines, we were at about 2,500,000 barrels a day pre pandemic and we're back up to about 50,000 barrels less than that. So our volumes have recovered almost 95% to 98% from where they were. These are the volumes across Texas and now the Bakken.
So a lot of Really good things happen on the crude as far as volumes. We can't really control the spreads. The spreads for part of the quarter Widen out a little bit. They've narrowed. They kind of go back and forth.
It's clearly a fact that there's too much crude capacity across Texas. So we continue to look at repurposing things and also providing more value than just point A to point B through our systems. But our crude team has done a fantastic job. Starting January till now, we've added about 500000 to 600000 barrels a day of crude cross oil that we didn't have at the beginning of this year, albeit at much tighter Spreads and margins than what we saw a year, year and a half ago, but we can only control what we can gather and transport for customers And the spreads will be where they'll be. So, and I guess, to finalize or to complete the question, yes, we feel like we're kind of at the bottom.
We think that we're going to continue to keep our volumes where they are or grow. We, of course, have kicked in the MVCs for our optimization project. New revenues that are coming in. So, similar to interstate, which the 2 most struggling segments you all hit on, All the others we've asked about, we're pretty excited about those now and in the future. But anyway, we similar to interstate, we feel like we've been at the bottom and everything's kind of
Our next question comes from the line of Pierce Hammond with Simmons Energy. Please proceed with your question.
Yes, good afternoon and thanks for taking my questions. My first is 2 years ago, you announced the office in Beijing, and not just to build business in China, but also throughout Asia. And you highlighted earlier the success you're having with the Orbit JV. So I'm just curious, what's your line of sight to other opportunities in Asia For Energy Transfer and how do you see that market evolving over the next few years?
It's Mac again. We are extremely excited. The pandemic really put a kind of a pause on not only LPG and ethane, but also crude. It kind of slowed everything down and everything, as everybody knows, the economy around the world, especially in the U. S, but Coming back, we have pages of companies that we're talking to different sizes for both Ethane and LPG expansion projects, we very much expect over the next year, if not sooner, within 6 months to Get to FID on another expansion, whether it's at Marcus Hook or at Nederland.
We've always kind of been proud of The fact that we're the only company in the country that can export both from the Gulf Coast and from Nederland infrastructure, I mean Gulf Coast and from Marcus Hook And we're able to structure and negotiate these deals with a lot of these Chinese companies and give them that option, But also give us option, which makes our assets more reliable and gives both of those terminals significant benefit. So That was a long winded answer to yes, it's picked up in a big way. We're in conversations with numerous companies in China as well as many others around the world And we couldn't be more excited about what we've done from the export build out capacity for ethane and LPG and crude oil For that matter and where the future is going to be around the world, we're exceptionally well situated to meet the market demands in the future.
Well, thank you, Mackie, for that. And then my follow-up pertains to the Panama announcement. I know it's Super early. But just curious from a high level, what do you see Energy Transfer bring into Panama? What would be the advantages To Energy Transfer, just sort of high level thoughts on what could be in the country?
Yes, we're really excited about that. What a great group of people. Everybody we've met with there in the government has been Just a pleasure to work with and we're really excited about where all that's gone. What do we bring to the table? If you look back over just the last not that In the years, we've gone from kind of nothing to now, as you heard on Tom's remarks, the export NGO in the world.
So that kind of says something. I just made a Take about 2 terminals that we have and what this terminal provide is the country of Panama to benefit From moving barrels that are much in need throughout the world to the Pacific side of their country and Become a major hub for the Asian markets as well as for the South American markets. So we bring the expertise, we bring We will be able to bring the barrels. We're going to be able to operate at really in effect 4 terminals, a hub on the Atlantic side, Civic side and the two That we have today. So we're very excited.
We're in the, as you mentioned, in the very early part of this. We look forward to where this is going And hopefully getting the FID not too distant future.
Thank you, Mackie.
Our next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed with your question.
Hi, good afternoon. Just wanted to start off with the EBITDA guidance, if I could here, because it seems like you've already completed a good portion of it over Half year to date. And so just wondering if there's something that you're expecting to show up in the back half of the year that would be a headwind Relative to the beginning of the year or anything else to think of here? Is it really just kind of conservatism with not raising the guide at this point? Just trying to understand Drivers within the range a bit better.
Listen, I'll start off with it. Good afternoon, Jeremy, we think our guidance is really down the middle of the fairway, the 12.9 to 13.3. And you're right, we've had a great start to the year with the 1st 6 months. But when you really look at it and you kind of look at the forward curves that we've used for the pricing, which we stayed right in line with that for all the various commodities. You've heard Mackie talk a lot about the volumes, etcetera.
That's the reason why we kept the range a little bit wider. So once again, we feel very good about this. We don't really feel like there's any headwinds on this. We're very excited about The last half of the year, the next two quarters. And I don't know, I'm looking at Mackie to see if you'd like to add anything more To the answer here, but we do feel very good.
We do not see headwinds.
Yes. I guess what I'll add is I kind I joked a minute ago about no questions yet around midstream or interstate or NGLs, but We're so excited about what we're seeing. We said it last time, the rigs are moving in. They're moving in, in a big way. We've seen our volumes in our Midstream, just in the Q1 of this year and the Q2 of this year go up by 8%.
And if you look at just the Permian alone, it's up 15%. So we're extremely well situated to where these rigs are. As everybody knows, you bring the gas to the plants and Connect to these plants are our residue intra and interstate systems and our NGL system. So if you look at what Kind of feeding into our NGL system, both our Lone Star pipelines and our Mont Belvieu fracs, We are now fracking about a little over 900,000 barrels a day. If you look back a year ago, we first brought on frac 7.
I think we did about 920 or 9:30 was our high, but that's a little misleading because when we brought on frac 7, we had a bunch of NGLs and wide grade and storage. So we're kind of feeding from the field, from the plant, plus out of storage, it's different today. We are filling our fracs today from the field, from the tailgate of all In fact, we're actually injecting some raw grade into storage. So we the NGL segment is just Unbelievably exciting. We can't say enough about our team and all the effort we put together at the end of 2020, beginning of 2021 around getting the Orbit project Completed online and finalizing all this LPG growth and boy are we incredibly well situated benefit from that all the way from The wellhead through the fracs and then on to the export market.
So pretty excited about that and that will kind of help feed into our EBITDA the last half of the
Got it. That's really helpful there. And then pivoting over here, it seems like a number of studies out I've talked about given the density of CO2 emissions off the Gulf Coast, there's really a good opportunity for kind of CO2 hub concepts On the Texas Gulf Coast, particularly as it relates to Houston there between petchem and heavy industry emissions. And just wondering over time, especially if these DC initiatives pass that would support CCUS Economics, what role do you see for ET here over time. And do you believe that CO2 storage sequestration is more of an offshore or onshore solution over time, just given the pros and cons of each side here?
This is Mackie again. Well, the first thing I'll say is that if you look kind of along the Gulf Coast, there's nobody that has more pipelines of all different sorts than us. So As we look to repurpose pipelines, if there's opportunities to repurpose them to move CO2 or blue gas from some of these Industry is along the coast. There's nobody probably better situated than us. But we're not really out chasing, say, a CO2 Secret station project out in the Gulf.
We're out in Timbuktu. What we're doing is looking at projects that are related to our assets And doing what we can to work with 3rd parties to figure out a way to either capture that or to process it or whatever the case may be. So As I mentioned earlier, Tom Mason has put a great team together. We're evaluating numerous opportunities and
Our next question comes from the line of Michael Blum with Wells Fargo. Please proceed with your question.
Thanks. Good afternoon. I wanted to ask on Valeneries II 2x. Now that you're just about Less than 2 quarters away from finally getting this project fully done. I wonder if you can give us some clarity in terms of How much the project ultimately cost?
What the economics could look like? And would you expect to sign additional shippers up once the pipeline
Michael, I'll start if Tom wants to add anything. It costs a lot. I'll start with that. Around the volumes, we today we can move about 220,000 to 125,000 in the next Phase which will be completed, we feel really good about sometime in September will put us north of 260, and by the end of the year, we'll be north of 280, We're approaching 300,000 barrels a day. So, really excited about getting that whole franchise to the end zone.
There are you got to kind of have the outlet and then the volumes come. The volumes are there. There's enormous reserves Of NGLs in the Marcellus and Utica, there's nobody positioned to be able to get that out besides us. Every other island is kind of full. And so we do have the opportunity to expand.
We'll be able to move, as I said, about 280,000 to 300,000, but we can expand at 4 If you buy in pumps, we also have enormous capability to increase our chilling and storage on the acreage we own there at Marcus Hook and also have In order to capability expanding our dock capacity, so we're extremely well situated to handle and to be the pipeline and Provider of choice for all the barrels out of that basin, and we're pretty excited that we're almost there.
Got it. Thank you. My other question was just on the Permian. Clearly, there's a lot of excess Crude pipeline out of the Permian right now, and it seems like there will be need for a natural gas another natural gas pipeline or expansion at Some point in the next couple of years. Just wondering if that's something, a potential conversion of a crude line to natural gas is something that you would I'll look at it or do you feel like your crude lines are basically full and they're not it's not the best use?
Thanks.
Mike, I think the best way we'll answer that is there's nothing off the table. So we will continue to look at all of our pipeline assets to see If some other product would be more profitable and more efficient for our partnership. So right now, our team has done, as I mentioned earlier, A fabulous job of kind of recovering our volumes in a short period of time this year. We have a group, kind of a new group that's working diligently to continue The momentum, so we'll see how things go. No doubt, the crude pipeline, the industry is so good at this, at overbuilding and Us and all of us have overbuilt, but we feel pretty good of where we're at.
We wish spreads were a little bit wider, but we will continue to analyze and look Every opportunity. As far as gas, we've got the ability to move quite a bit of gas from West Texas. We have Some of these contracts falling off in 4 or 5 years from now, some fairly significant volumes. So we welcome anybody Just looking to expand or looking to secure space in 2024 or 2025 on a new pipeline. We certainly can accommodate a new pipeline, but Also can accommodate with capacity that we'll have available as well today.
So anyway, we'll continue to look at everything and whatever makes the most sense, we'll
Our next question comes from the line of Gabe Moreen with Mizuho. Please proceed with your question.
Hey, good afternoon, everyone. Someone beat me to the Panama question, so I won't ask that one again. But maybe I can ask about The Enable FTC saga here, and I think you're surprised that getting so many requests. Just thinking from a bigger picture, if you think the FTC may be Raising the bar here a little bit on consolidation, I don't know whether it's an energy here or just in general. Do you think that changes your approach at all to future M and A or consolidation within the sector, which I think as we mentioned in previous questions, Too much capacity out there, which I think we'd all agree is needed.
Yes, I can start and one of the Toms can follow-up, I guess, but I don't know how to characterize it. I guess, I could say, we did a lot of looking at this as we were announcing And we just don't see any issues. There's so much competition out there everywhere we'll enable that pipelines, we really don't see any issues. So we were A little frustrated and disappointed with the second request. However, we do feel like we're working very well with the FTC.
We're doing what they've asked. They're working with us around the timing. And so right now, I'd say we're pretty confident, as we said earlier, that we're going to provide them with everything that they've asked for and that we'll be able to close the not
Dave, I'll chime in here. This is Tom. We still feel very strong that consolidation is the Right path to go in the midstream space. Therefore, we won't let our foot off the gas pedal here. We think there's a lot of Good drivers to bringing assets together, a lot of optimization that can be done.
So yes, no plans to Really let off on our efforts toward consolidation.
Got it. Thanks, Mackie. Thanks, Tom. And maybe as kind of a follow-up To that, you didn't mention M and A related to that as sort of a capital allocation option, although I assume it So would be an option. I think there were some media reports about potentially being interested in going downstream and looking at petrochemicals.
So I was wondering if you can maybe Comment on those, on that and then maybe also really into another deal where the FTC has interfered. There's some interstate gas pipelines out there. I was wondering if Those types of assets might be of interest even if they don't appear to offer any synergies to your existing asset base.
All right. Well, why don't I start off with the first part of your question, then I'll talk to Mackie for the second part. We are very much interested in moving downstream. We think that's a natural fit for all the things that we've talked about today, all the Things that you've seen that we've been doing, we think it's the perfect situation to or a natural situation, if you will, Natural path for us to go down to look downstream. So yes, we are continuing to have dialogue and it is something that We remain very interested in
them.
Okay. Thanks, guys.
That concludes our question and answer session. I'd like to hand it back to Tom Long for closing remarks.
As always, we appreciate all of you joining us today. Thank you for your support, and we look forward to talking to you in the near future.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.