In its 2Q25 earnings, Enterprise Products (EPD) confirmed a key point East Daley Analytics has flagged for clients: NGL export markets are loosening as new expansions outpace supply growth.
On the earnings call, executives disclosed that spot rates for LPG dock slots fell 60%. EPD reported a $37MM drop in gross operating margin vs 2Q24 from LPG activity at the Enterprise Hydrocarbons Terminal due to lower contract and spot loading fees, partially offset by higher export volumes. EPD in late July began service at its Neches River Terminal, contributing in part to the slackening market conditions.
It’s just one data point, but confirms our warning of a growing imbalance in the NGL space. Growth from the Permian Basin, the largest source of NGLs, has eased while pipeline and dock infrastructure expansions now outpace supply. The industry is entering an overbuilt market, creating pressure on dock fees and introducing downside risk to recontracting across the value chain.
Since April, Permian rig counts have fallen by 40, according to East Daley’s Rig Activity Tracker, as producers respond to market uncertainty. We continue to forecast ~500 Mb/d of NGL growth from 2025 to 2030 in the NGL Hub Model, though this is 250 Mb/d below our prior growth trajectory on average (see figure).
With slower supply growth, dock space will increasingly sit idle. In the NGL Hub Model, East Daley forecasts ~500 Mb/d of LPG dock capacity will remain unused between 2028-30. This is not a demand-side issue; rather, the infrastructure buildout is running ahead of the barrels needed to fill it.
These new conditions signal a strategic pivot from fee maximization to volume capture. In this environment, vertical integration is critical. Companies like EPD, Energy Transfer (ET) and Targa, who control the full NGL chain from wellhead to dock, are best positioned to retain barrels and protect system margin.
Expect midstream players to lean into strategies to capture volumes. The goal has shifted to maximizing throughput and keeping barrels on integrated chains, from G&P systems to pipes, fractionators and export terminals. This environment creates “loss-leader” conditions, where players may accept tight or negative margins on certain segments to preserve system-wide returns through scale and integration.
By contrast, companies with less integration face greater risk. ONEOK (OKE) and MPLX are particularly exposed at their planned Texas City JV dock. MPLX’s recent $2.375B acquisition of Northwind Midstream, which we view as driven by ownership of NGLs, highlights the intensifying competition for supply. – Julian Renton Tickers: EPD, ET, MPLX, OKE, TRGP.
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