Aug. 1 (UPI) — Gross operating margins for crude oil products declined, though U.S. pipeline company Enterprise Products Partners said new projects were under construction.
The company reported net income declined, but cash flow improved over the first quarter. Adjusted earnings before interest, taxes, depreciation and amortization of $1.8 billion marked a 32 percent improvement over second quarter 2017.
“We currently have $5.2 billion of growth projects under construction that are scheduled to be completed by the end of 2019,” CEO Jim Teague said in a statement Wednesday. “We are continuing to make good progress in developing the next tranche of organic projects.”
That’s important for a U.S. energy sector facing delivery bottlenecks because production trends are straining existing pipeline capacity. Tariffs imposed on imported steel on national security grounds have been met with industry criticism because it would make future infrastructure more expensive.
The U.S. energy sector depends on a handful of foreign suppliers for steel pipelines as the domestic sector focuses on other industry sectors like automotive.
The company reported gross operating margin from its crude oil pipelines segment was $53 million, which included losses from widening difference in U.S. oil price indices. That compares with a gross operating margin of $237 million for second quarter 2017.
That came as crude oil pipeline transportation volumes set a record in the quarter for Enterprise at 2.1 million barrels per day, a 40 percent increase from the same period last year.
The company announced plans last year to convert a pipeline in its portfolio that carries natural gas from the Permian shale basin to a crude oil pipeline. Enterprise said repurposing one of its gas lines to carry oil would lift its total carrying capacity to more than 650,000 barrels per day from the Permian shale to its crude oil hub in Houston.
Capital expenditures increased 43 percent from second quarter 2017. The company realized an average price for West Texas Intermediate, the U.S. benchmark for the price of oil, of $65.38 per barrel. The spread, or difference, between U.S. price indices ranged from a $7.95 per barrel discount to a $5.09 per barrel premium to WTI.