Houston-based Enterprise Products Operating LLC is proposing the construction of a 2 million tons per year ethylene manufacturing facility in Beaumont, Texas.
The facility would rank among the largest in the U.S., according to analysts with Tudor, Pickering, Holt & Co.
“The preliminary filing represents an early step toward a possible project with commercial discussions ongoing but formal commitments not yet disclosed,” the analysts said.
While Enterprise has yet to make a final decision about the project, it recently filed a tax abatement with the Beaumont Independent School District and the Texas Comptroller’s office.
“The 313 was submitted ahead of time so Enterprise can be prepared when, or if, we decide to move forward,” said a spokesperson with Enterprise.
Enterprise was referring to the 2001 Legislature’s Texas Economic Development Act, often called “Chapter 313” for its position in the Texas Tax Code. Chapter 313 allows public school districts to offer tax incentives for businesses that invest in their communities, according to the Texas Comptroller’s website.
Enterprise has “framed the project as still in early stages with any ultimate final investment decision likely to come alongside a strategic partner,” the analysts said. The filing points to construction starting between 2024 and 2025, with possible completion by 2028.
“While the capex burden would be material, a JV partner would likely drive annual spend below the $1 billion mark,” said Tudor, Pickering, Holt and Co. “Enterprise has significant balance sheet flexibility with current leverage tracking to ~ 3.0x Debt/EBITDA. We’ll be looking for incremental detail on commercial terms on the upcoming Q2 earnings call.”
Enterprise Products Partners LP has extensive pipelines in the U.S. Gulf Coast area and an ethylene export terminal, located at Morgan’s Point facility on the Houston Ship Channel.
