On Tuesday, Energy Transfer (NYSE:ET) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
This content is powered by Benzinga APIs. For comprehensive financial data and transcripts, visit https://www.benzinga.com/apis/.
View the webcast at https://edge.media-server.com/mmc/p/269bhg44/
Summary
Energy Transfer reported a strong financial performance with adjusted EBITDA of $4.9 billion for Q1 2026, a notable increase from $4.1 billion in the previous year.
The company raised its 2026 adjusted EBITDA guidance to a range of $18.2 billion to $18.6 billion, up from the previous range of $17.45 billion to $17.85 billion.
Significant operational highlights include record midstream gathering, NGL fractionation, NGL export, and crude oil transportation volumes.
Energy Transfer plans substantial capital investments with new growth projects, including the Springerville lateral pipeline and expanded natural gas services to power plants and data centers.
The company sees potential long-term growth opportunities, particularly in the Permian Basin and international LPG markets, driven by global demand shifts due to geopolitical conflicts.
Management expressed confidence in achieving or exceeding the high end of their guidance range, citing the strong performance and strategic positioning of their assets.
Full Transcript
Operator
Good morning and welcome to the Energy Transfer first quarter 2026 earnings call. All participant lines will be in the listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions. To ask a question we press STAR and then one on your touchstone phone. To withdraw your question you may press STAR and then two. Please note this event is being recorded. I would now like to turn the conference call over to Mr. Tom Long, Co Chief Executive Officer. Thank you and over to you.
Tom Long (Co Chief Executive Officer)
Thank you Operator & good morning everyone & welcome to the Energy Transfer first quarter 2026 earnings call. I'm also joined today by Mackey McCree, Dylan Bramhall & other members of the senior management team who are here to help answer your questions after our prepared remarks. Hopefully you saw the press release we issued earlier this morning. As a reminder, our earnings release contains an update to guidance & a thorough MDA that goes through the segment results in detail & we encourage everyone to take a look at the press release as well as the slides posted to our website to gain a full underst&ing of the quarter & our growth opportunities. 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 upon our current beliefs as well as certain assumptions & information currently available to us, & are discussed in more detail in our Form 10Q for the quarter end March 31, 2026, which we expect to file later this week. I'll also refer to adjusted EBITDA & Distributable Cash Flow or dcf, both of which are non GAAP financial measures. You'll find a reconciliation of our non GAAP measures on our website. Let's start today by going over our financial Results. For the first quarter of 2026. We generated adjusted EBITDA of approximately $4.9 billion compared to approximately $4.1 billion for the first quarter of last year. DCF attributable to the partners of Energy Transfer as adjusted was approximately $2.7 billion compared to approximately $2.3 billion for the first quarter of 2025. These results were supported by strong operations including record midstream gathering volumes, NGL fractionation volumes, NGL export volumes & crude oil transportation volumes. For the quarter & for the first quarter of 2026, we spent approximately $1.5 billion on organic growth capital primarily in the intrastate, NGL & refined products, midstream & interstate segments excluding sun & USA compression CAPEX turning to our 2026 guidance as a result of our strong first quarter performance across our segments as well as revised expectations for the rest of 2026, we now expect our 2026 adjusted EBITDA to range between approximately $18.2 billion & $18.6 billion compared to the previous range of between approximately $7.45 billion & $17.85 billion. This includes a beat of approximately $500 million & the capture of our full year optimization target in the first quarter as well as the expectations for continued outperformance for the balance of the year. Now turning to Organic Growth Capital Guidance, we now expect 2026 organic growth capital guidance to be between approximately $5.5 billion & $5.9 billion compared to our previous guidance of approximately 5 billion to $5.5 billion excluding sun & USAC. This increase is primarily a result of the addition of several new growth projects including the construction of the new Springerville lateral off our existing Transwestern pipeline, the construction of pipelines & meter stations to provide natural gas to various power plants & data center sites in Oklahoma & Arkansas. Accelerated timing on longer term projects like Desert Southwest & Florida Gas Transmission capital spend & gathering system & compression build out in the midstream segment primarily in the Permian Basin associated with recent contract acreage dedication extensions. I will provide additional details about these projects later in the call. Beyond these projects, we continue to have a significant backlog of opportunities that are expected to support future growth. Now turning to our results by segment for the first quarter & we'll start with NGL & refined products. Adjusted EBITDA was approximately $1.2 billion compared to approximately $978 million for the first quarter of 2025. We saw higher throughput across our Gulf coast pipeline operations & record performance at our Mont Belvie fractionators. In addition, new chilling capacity placed into serversus last year contributed to a $50 million increase in earnings as well as record export volumes from our needle & terminal in the first quarter. This more than made up for fog delays experienced in the fourth quarter of 2025. During the first quarter of 2026 we realized higher gains of $65 million due to the timing of the settlement of NGL & refined product inventory hedges which offset losses realized in the fourth quarter of 2025. Results for the quarter also included an increase of approximately $50 million from higher premiums from the sale of propane & butane for both export & domestic supply, as well as approximately $25 million increase due to inventory write down losses realized in the first quarter of last year for midstream adjusted EBITDA was approximately $887 million compared to approximately $925 million for the first quarter of 2025. Base business earnings increased primarily due to growth in the Permian Basin where we saw volumes up 8% related to new & upgraded processing plants brought online since the first quarter of last year. In addition, we saw a $25 million decrease due to lower NGL natural gas prices compared to last year. As a reminder, the first quarter of last year included the recognition of revenue of $160 million from winter storm URI for the crude oil segment, adjusted EBITDA was approximately $869 million compared to approximately $742 million for the first quarter of 2025. During the quarter we saw continued growth across several of our crude oil pipeline & gathering systems. Results also included a $60 million increase related to favorable impacts to our crude oil inventory value as a result of rising crude oil prices. We expect these gains to be mostly offset with hedge losses & during the second quarter of this year. In addition, we recognized $43 million of revenue that had previously been reserved related to the recontracting & extension of a legacy shipper contract during the recently completed successful DAPL open season. And we had lower expenses due to a $43 million adjustment to an accrual for a litigation related contingency. In our interstate natural gas segment, adjusted EBITDA was approximately $519 million compared to approximately $512 million for the first quarter 2025. This increase was primarily due to higher contracted volumes at higher rates on several of our pipelines including Panh&le, Eastern Trunk Line, Florida Gas & Transwestern. And for our intrastate natural gas segment, adjusted EBITDA was approximately $437 million compared to approximately $344 million in the first quarter 2025. This was primarily due to an increase of approximately $100 million from winter storm burn. Results for the first quarter show how incredibly well positioned our assets are across the country. Combining our extensive pipeline network, our storage facilities & our terminals with our exceptionally experienced optimization & operating teams, we were able to capitalize on quickly changing dynamics & market volatility for a closer look at some of our major projects & I'll start with the natural gas side of our business where we continue to see significant dem& for our serversuss. We are making good progress on our Desert Southwest pipeline project. In March 2026, Transwestern Pipeline initiated the FERC pre filing process for the project as previously scheduled & we expect to file the formal certificate application with FERC in the fourth quarter of this year. In April, as the continuation of our Comprehensive Stakeholder Engagement program, we hosted 15 open houses & communities along the entire proposed pipeline route throughout Texas, New Mexico & Arizona. Our teams continue to actively engage with elected officials, county leadership, l&owners & associated communities along the route to communicate project information & updates & we have engaged with over 500 stakeholders today. Our discussions have continued to be very positive as existing & potential stakeholders learn more about the expected economic benefits & realized the critical need for a dependable supply of natural gas to help with the transition from coal fog generation to natural gas power generation & to help address significant power needs in the coming years. Driven by population & dem& growth in Arizona & the Mexico markets, we expect this pipeline to be in serversus providing a reliable energy Source by the fourth quarter of 2029. On the existing Transwestern pipeline, we recently approved the construction of the new Springerville lateral, an approximately 120 mile 30 inch pipeline that will have a capacity of approximately 625 million cubic feet per day & extend south to new natural gas powered generation that is expected to replace two coal fired plants. This project is backed by 20 year agreements & is expected to be in serversus in the fourth quarter of 2029. Total growth capital for this project is expected to be approximately $600 million. New construction of our Hugh Brinson pipeline is going well. We continue to expect Phase 1 to be in serversus in the fourth quarter of this year upon the full build out of the 400 mile pipeline & associated compression required to move 1.5 bcf per day of gas to customers contractual delivery points. However, if we stay on our current schedule, we will have the ability to begin flowing some gas early in the third quarter which is prior to placing Phase one into serversus & we continue to expect Phase two which includes additional compression to be in Serversus in the first quarter of 2027. The pipe is fully contracted from west to east & we also have a growing amount of backhaul volumes committed that are expected to add significant upside turning to Florida gas transmission or Florida Gas Transmission. In February we completed open seasons for two new projects that are supported by 15 to 25 year long term agreements with anchor shippers. The phase nine project, which is designed to exp& perm natural gas transportation capacity to multiple new & existing meter stations located across Florida Gas Transmission's market area. This project will consist of the construction of approximately 90 miles of pipeline looping as well as new & upgraded Compression with an anticipated capacity of approximately 525 million cubic feet per day. We recently locked in pipe for delivery at the end of 2027 & compression for delivery in the first quarter of 2028 & we continue to expect the project to be available for serversus in the fourth quarter of 2028. The South Florida project is designed to enhance the reliability of critical infrastructure & increase overall deliveries in South Florida. The project has a condition precedent, but Once we reach FID it will consist of the construction of an approximately 40 mile extension with a capacity of approximately 230 million cubic feet per day along with compression & a new meter station & is expected to be available for Serversus in the first quarter of 2030. Energy transfer share of the cost for these two projects is expected to be approximately $565 million & approximately $110 million respectively depending upon final shipper volume elections. We continue to make progress on a new storage cavern at our Bethel Natural Gas storage facility which is expected to double our working gas storage capacity at the facility to over 12 BCF. In February, our intrastate power team added connections to serve three new power plant loads in the state of Oklahoma. We have since added a port connection for a total of approximately 300 million cubic feet per day of new gas supply. The first of these connections is in serversus with two more expected in serversus in the third quarter of this year. The remaining connection is expected to be in Serversus in the fourth quarter of 2028. These connections are supported by long term contracts with investment grade counterparties. In addition, we have entered advanced negotiations to serve another 400 million cubic feet per day of new power plant dem& in Oklahoma & since our last earnings call, Energy Transfer has entered into agreements to provide long term firm natural gas transportation serversuss through our Texas intrastate system to support the Nexus Hubbard Campus located in Central Texas where Nexis is constructing a behind the meter AI hyperscale campus powered by on site natural gas generation. Initial volumes are expected to be approximately 150 million cubic feet per day with certain rights by the transporter to increase its capacity upon election. Costs associated with this project are expected to be fully reimbursed & it is expected to be in serversus by the end of this year. In addition, we recently entered into a LOI to provide approximately 150 million cubic feet per day of firm natural gas transportation serversus through our EGT pipeline to support a new data center site in Arkansas. The facility is expected to be in serversus in mid-2027. Energy Transfer also previously entered into a 20 year binding agreement with Entergy Louisiana to provide at least 250,000 MMBtus per day of firm transportation serversus to fuel their facilities in Richl& Parish, Louisiana. To facilitate flow of this gas, we plan to construct an 18 mile lateral off of our Tiger Pipeline for which our customer recently exercised their option to upsize the pipeline lateral to 36 inches & they continue to have an option to increase their commitment to up to 1bcf per day. In addition to these projects we have multiple ongoing discussions with power plants to provide significant volumes & associated transportation revenues across 15 states which have a high likelihood of reaching FID. Now looking at our Permian processing expansions, the 275 MMCF per day Mustang Draw 1 processing plant is currently being commissioned & is expected to be in full serversus next month & we expect volumes to ramp up quickly & we continue to expect our 275mmcfd Mustang Draw 2 plant to be in serversus in the fourth quarter this year. In our NGL segment, we placed the Gateway NGL pipeline debottlenecking project into serversus in the first quarter of this year providing increased deliveries of Delaware Basin liquids to Energy Transfer's NGL fractionation complex in Mont Belvieu. Construction is also underway on a new 3 million barrel ethane storage cavern at Energy Transfer's NGL fractionation complex at Mont Belvieu. The cavern, which is expected to be in serversus in the second half of 2027 will help support our ninth fractionator at Mont Belvieu that is expected to be in serversus in the fourth quarter of this year as well as future ethane export expansions at Nederl&. We've recently extended the vast majority of our ethane export agreements into 2041 adding 10 years to the current contracts. We are hopeful to be in the position for incremental Nederl& Ethane expansion in the coming months. In our crude oil segment, we continue to work with Enbridge on a project to provide capacity for approximately 250,000 barrels per day of light Canadian crude oil through our Dakota Access pipeline. The open season is underway & we still expect to take FID of this project by mid-2026. In addition, we have approved an expansion of the Bayou Bridge crude oil pipeline which is expected to increase the capacity to up to approximately 600,000 barrels per day depending on destination & product mix. This expansion is underpinned by a 10 year term extension & volume increase from a dem& pull customer & is expected to be in serversus in Q1 of 2027. I think. As all of you can see, we had a lot of great things happen in the first quarter & many more exciting things on the way, which contributed to our increased EBITDA guidance for 2026. Our guidance each year is based upon expectations for the base business with minimal optimization included. However, in five of the last eight years we have seen large spreads optimization & other opportunities that have provided significant upside to our base business. These kinds of benefits, while one time in nature highlight the unique ability of our business to consistently capture significant upside during market volatility. While additional upside is expected to be dependent upon the duration & impact of current market disruptions & resulting commodity prices, our assets remain incredibly well positioned to continue maximizing on these opportunities. As a result, we are optimistic that some of the benefits we saw in the first quarter will carry over throughout the rest of the year, putting us in a position to achieve or exceed the high end of our guidance range. Additionally, we continue to expect the ramp up of growth projects including our Flexport NGL Export Project, New Permian Processing Plants, Hugh Brinson & others which we expect will contribute to continued growth in 2026. In particular, once our Hugh Brinson pipeline is in serversus, it will be extremely well positioned to become a major US Header system that ties together our network of large diameter pipelines providing significant future upside. Our large slate of growth projects is contracted under long term commitments & expected to generate mid-teens & considerable earnings growth over the next decade or more. Completing these projects safely on time & on budget remains one of our top priorities for 2026. We also continue to see new growth opportunities across all aspects of our business demonstrated by the announcement of several new projects this quarter & we remain extremely well positioned to help meet the substantial growth in dem& for energy resources over many years to come. As a result, we also remain very focused on capital discipline, targeting a long term annual distribution growth rate of 3 to 5% & maintaining our leverage target of 4 to 4.5 times EBITDA. In summary, because of the breadth of our assets, we have an unparalleled ability to transport large amounts of energy from all of the major supply basins to markets throughout the US including major trading hubs, power plants, data centers, city gates, industrial complexes & other downstream markets, including international markets, through our export terminals. This concludes our prepared remarks. Operator, please open the lineup for our first question.
Operator
Thank you. We will now begin the question of the session. To ask a question, you may press star and then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. At this time, you will pause momentarily to assemble a roster. We have the first question line of Michael Bloom from Wells Fargo. Please go ahead.
Michael Bloom (Equity Analyst)
Thanks. Good morning everyone. Wanted to just start kind of high level in light of the Middle east conflict that's ongoing, are you seeing any change in US Producer activity or messaging? And I guess in a similar vein, would you expect to see any permanent shifts in where global buyers will be sourcing their hydrocarbons, perhaps leaning more heavily on the US and are you seeing any of that in your discussions yet?
Mackey McCree
Good morning, Michael, this is Mackey. Excuse me. As I look around the room as you're asking that question, there's like five people that want to answer that question because we're so excited about where we sit and where our assets sit and certainly what's been going on in the world. There's a very clear redirection to the US for all products, LNG, NGLs, oil, etc. And it really has emphasized the value of what this country offers and more importantly, what our partnership offers to deliver all these products around the world. If you talk about individual basins, it's all different, but I think the major tenor throughout is optimism. Not a rush to put a bunch of rigs in, but even as of yesterday, one of our bigger customers out in the Midland basin, Diamondback, they announced they're going to upsize and bring in more rigs. So I think we're going to see it's kind of slow moving, not a lot of talk, but I think it's very evident that we're going to see more and more rigs moving in as more countries and companies turn to the US for supply, regardless of how long that war may last. An example is in North Louisiana and Haynesville. Excuse me. We're projecting about 800,000 Mcf of growth into our processing, treating and downstream assets in North Louisiana by August or September. So clearly the producers in North Louisiana are drilling and are going to bring on ducks as we proceed deeper into this year. And we think that's going to continue for many years to come. So we love where our assets are. We're very excited about the future of growth of drilling. Not real clear how quickly all the companies and all the bases are going to pick up, but the bottom line is there's going to be increased drilling, increasing drilled but uncompleted wells (DUCs), bringing on new wells from drilled but uncompleted wells (DUCs) throughout the country. And we're very Excited about where we sit.
Michael Bloom (Equity Analyst)
Thanks for that, Matthew. Appreciate it. Maybe just to ask specifically on the LPG exports, first of all, can you just remind us what percent of your capacity is contracted versus versus open? And are you seeing any increase in demand for contracted capacity? And do you think potentially you could see length of contracts or just rates kind of trend higher over time? Thanks.
Mackey McCree
Kind of yes to all the above. As I mentioned earlier, whether we're meeting with companies that are looking at building assets over here and or buying products over here, everybody's turning to the US So we're extremely well positioned there. Good or bad, our strategy as a company is looking long term. So whether it's LPG or natural gas, whatever it is, we're looking to extend out into the 2000s and 2000s as much as our business as possible. So our team did a great job at good healthy rates of extending our LPG business well into 2000-30s. So regretfully we don't have a bunch of spot, but we have four or five ships. We could be printing a lot more money. But fortunately we do have spots available at the Flexport project too that we just completed that we're starting to fully ramp up. We do have at least one or two slots a month that we can benefit from these higher spreads. And to answer the final part of your question, we do think this will bring about longer terms and stronger margins as time goes on as everybody leans on the US for supply.
Michael Bloom (Equity Analyst)
Thank you.
Operator
Thank you. We have the next question from the line of Gabe Maureen from Mizuho, please go ahead.
Gabe Maureen (Equity Analyst)
Hey, good morning team. Just wanted to ask about guidance. It sounds like on the one hand in the slides you didn't really shift your allocation between bread and commodity based margin for the year and you're using the forward curves. But on the other hand, I think you noted in your remarks you're hopeful to see guidance or the upper end of the guidance here. If things persist, can you just maybe talk about some of the moving pieces and I know it's pretty considerable and maybe sort of the assumptions on commodity versus forward curve and what you're really baking in for the rest of the year here with this guidance bump.
Dylan Bramhall
Okay, let me walk you through some additional thoughts rather on the full year guide I think will help clear some of this up. We had an incredible first quarter. Tom just walked through the fact that we beat our internal plan by $500 million plus achieved our full year target for optimization earnings out of the 500. Want to point out that about 300 million of that would probably be considered one time as we described it. And as Tom pointed out, we call it one time. But we see this almost every year at energy transfer with our assets and people. So how much of that really you call one timing is up to the individual, I guess. But then the rest of it's really a result of the tailwinds to the business. So as you see, we raised guidance by $750 million at the midpoint. This is really based on line of sight to continue that outperformance across the majority of the segments. And it's everything. It's volumes, it's rates, it's spreads. And so that's why you didn't see us update that pie chart there. It's really permeating everything we do here. And a lot of this as a result of the conflict in the Middle east, making it clear, as Mackie pointed out, the need for these reliable US energy supplies. And so that's increasing the demand and the volumes and rates. And so while we in energy transfer, we pray for a resolution of this conflict, we feel that it's very likely that the supply and product flows will need an extended amount of time to return to some form of normalcy on the back end of this. It's likely they'll never go back to exactly how it was pre conflict. We saw this with the Ukraine conflict and today's issues just drive home even more the need to the reliability of the energy from the US here. And so as we look through the balance of the year from the commodity price standpoint, that midpoint of the guidance range, I think you could say is based on a conservative price that going forward, if prices remain anywhere near where they are right now, that will push us to that high end of the guiding range and potential to exceed that. So I think that should help clear up how we're thinking about the balance of the year here.
Gabe Maureen (Equity Analyst)
Thanks, Dylan. And then maybe if I can just follow up with a question on Desert Southwest and the Springerville lateral. I'm just curious whether the volume heading to that ladder was contemplated in the original 2.3 BCF on desert Southwest or whether there's potentially upsizing to the base project. And then also as far as potential for further lateral along those lines, I know you've talked about the potential to upside the pipe. And then lastly on that, anything change in terms of the regulatory approval or timelines given the lateral associated with the project. Now. Yeah, this is Mackey again, so kind of separate topics talking about the Springer lateral that's tied as Tom mentioned to the retirement of some coal plants, replacing it with natural gas fired generation, we believe that the majority of that gas will come from either the San Juan Basin and or from the Permian Basin. Are there other latter opportunities off that? Sure, there's always going to be stuff we're looking at separate that from your question on Desert Southwest. Absolutely. All along through New Mexico and especially in Arizona, there are numerous opportunities to lay laterals to different power plant opportunities and different customers. So we, our team is constantly chasing that. There's a lot of volume, a lot of demand that we're chasing and so we have zero concerns about selling the remaining portion of that gas through the largest pipeline that's ever been built in the US Once we complete it. So once again, like all of our assets, we're going to do the best we can to add value on assets that are already in the ground. And the Springerville customers can ultimately source their gas from anywhere on the TW system, but the vast majority of it will come from Permian Basin or San Juan. Thanks, Marky.
Operator
Thank you. We have the next question from the line of Teresa Chen from Barclays. Please go ahead.
Teresa Chen
Good morning. Going back to the macro side of things, assuming an uptick in U.S. production materializes and accelerates from here, can you talk about the operating leverage across your system to the extent where ET can handle incremental volumes without deploying additional CapEx? And more broadly, where do you see the critical bottlenecks likely to arise either for the industry or across your assets in particular? And, and how does that translate to additional opportunities for energy transfer?
Dylan Bramhall
Yeah, Theresa, as far as the operational leverage, let me kick off and I'll turn it over to Mackie to give some additional detail here. When you look at our systems, particularly in midstream, we've got a lot of capacity available or idle capacity we could bring back online quickly. Across the midcon, we've got a lot of capacity in the Eagle Ford, we've got a lot of capacity in our gathering systems in the Haynesville and in the Northeast we've got some pipeline capacity throughout various pipeline systems, but we've got capacity to move NGLs out of the Permian Basin, out of the Eagle Ford. I think those would be the first places I would point where we have capacity either available or quickly available that we could bring online with little to no capital and be able to move significantly higher volumes. And so that's probably what leads you on the operational leverage. And Mackie, I don't know if you want to comment Anymore on bottlenecks in the system.
Teresa Chen
Yes. Thanks, Dylan. Yeah. As far as bottlenecks, it makes me think about, for example, our NGL segment and as Tom read and as we released this morning in our press release is that we had record levels from the wellhead, so to speak, from an NGL perspective. We had record transportation revenues and volumes. We had record fractionation volumes, we had record terminal volumes, we had record export volumes. So when you talk bottlenecks, we kind of try to stay ahead of it. Right now, as everybody knows, we completed Flexport 2. We are slowly ramping that up and benefiting from whether ethylene or ethane or propane are the best price margins. We'll benefit from that, but we're trying to stay ahead of it. As Tom mentioned earlier, we are way down the road and very optimistic on another announcement of a major ethane expansion. So the way to avoid bottlenecks, stay ahead of it, and that's what we're trying to do, is stay ahead of the production as it comes on. So we're building crowds as quickly as we can to fit the needs of our customers downstream, transport, pipeline capacity as well as frac and in this case export capabilities. So outside of that, you know, could you say there's a bottleneck in the Permian Basin today? Absolutely. By the end of this year, first part of next year, that bottleneck is going to open up and there's going to be a enormous opportunities producer to drill away as much as they want to drill because there'll be plenty of capacity for a number of years to come. But really bottleneck wise, don't really see anything anywhere else. We try to stay ahead of where the production, where our customers are growing and connecting that with the markets downstream and very excited about our ability to stay ahead of that and create more value for our partnership. Great, thank you. And for the gas transmission projects related to delivering gas supply for data centers or power generation in general, some of these expansions seem relatively capital light. So maybe not coming with a huge uplift in EBITDA from the project itself, but what proportion of them would you say have synergistic upstream opportunities where energy transfer brings the gas supply and or can these projects can pave the way for expansion upstream of the current projects?
Mackey McCree
This is Mackie again. If you think about Hubrinson and it's coming online, we're going to start ramping it up next quarter and we will have a full phase one in service by the end of the year. That gives us the ability to do a Lot of things, as we've said in our statements before, we said today to swing volumes where volumes are needed, where the markets are the greatest demand. So if you look at that system and what Hugh Brinson does for entire intrastate pipeline network in Texas, we already have deals. We're working on additional transactions where to your point, not a lot of capital, but we're going to be able to flow more and more backhaul volumes out of the Maypearl area south of Dallas, Fort Worth, out of East Texas, even from Katy, where we're very close to signing a large transportation deal to a data center. And the source supply is going to be Katie. So we have such a fungible system that has the ability, especially with our massive storage capabilities in the Houston, North Texas area and growing and expanding those, we have enormous capacity to really grow our volumes in a lot of cases without adding much capital. So as we said before, we look at our assets, especially our pipeline assets across the country, and we couldn't be more pleased and really more fortunate to be located in such great areas where data centers are built right on top of us. And we're able to benefit not only from normal flows like in Texas west to east, but now we're going to be able to benefit in multiple directions, sourcing the best place to supply for our customers to the market demand areas they're asking us to deliver gas to.
Teresa Chen
Thank you so much.
Operator
Thank you. We have the next question. Jeremy Donacht from JP Morgan, please go ahead.
Jeremy Donacht (Equity Analyst)
Hi, good morning. Morning. Morning. Just wanted to continue with the bottlenecks theme, if I could. Thinking about the Permian and thinking about the processing side specifically. Just wondering if you could share any thoughts on how you think the cadence of future processing plants might un. We saw some competitors announce some new plants this quarter, so just wondering any color you could provide there and how you see that developing.
Mackey McCree
Okay, this is Mackey again. Yeah, Brian and Alex and our GNP team have done such a great job. And yeah, we hear about announcements from all our competitors and their plants and we just kind of pay attention to what we do. What we don't do is get ahead of ourselves. We're not going to go out and build a bunch of cryos that aren't fully sold out and fully committed to. So that's why maybe we haven't announced as many as some of our competitors or especially in the future. But we're very excited about the 550,000 Mcf that we'll have on by the third quarter. One of those coming on here next month and we will always take a look at when is the next one due to come on and I'd be surprised if certainly not late third quarter to by the end of this year that our GMP doesn't come to us say we need to add another one very likely in the Delaware. It's a little ahead of the game right now. Our focus right now is to bring these cryos on that we're constructing today and then we expect those to ramp up fairly quickly. But we'll do everything we can and will stay ahead of the volume commitments that we have. And very excited like I keep saying, where our assets are, how well located our pipelines are to gather gas and bring them to cryos and then ultimately deliver it into our downstream assets, both NGL and residue pipelines.
Jeremy Donacht (Equity Analyst)
Got it, that's helpful, thanks. And then just switching to the Haynesville if I could, the 800 you talk about coming this year, quite a large quantity there. I was just wondering if you could talk a bit more I guess on timing, cadence of how that looks like and is this really LNG poll or just any more color on how you see this unfolding over the course of the year?
Mackey McCree
Yeah, I can't really speak to the ultimate market for all that. Just bottom line is the producers that have drilled are drilling and have drilled but uncompleted wells (DUCs) have indicated to us that they're about to start really ramping up bringing on gas. As was said earlier, we expect to bring on net about 500,000 a day. A lot of that's treated so we'll be treating it, processing it and that will the vast majority, I think all of it actually is going into our downstream pipes where the ultimate market is. Sure a lot of that will probably find its way to LNG markets, but most of those are third party customers taking that transport and we don't know the ultimate market.
Jeremy Donacht (Equity Analyst)
If I could sneak in one last quick one. Just as far as exports are concerned with crude oil refined products wondering opportunities you see there in light of global macro volatility.
Adam
Hey, this is Adam. So we've definitely seen a ramp up across our docks on all products. So I think with the confidence that we talked about earlier, there's a clear demand for incremental U.S. energy and with the record export numbers that we've seen over the last couple weeks be published, like we at ET are benefiting from our share of that for sure. So we expect that while this continues, there's definitely increased activity across the docks both from a crude LPG and Refined products perspective. But then as Dylan alluded to earlier, even if we get back to some sense of normalcy, it will never go back, we believe, to kind of where we have been before and that increased demand will stay at levels elevated to before the conflict.
Jeremy Donacht (Equity Analyst)
Got it. Helpful. I'll leave it there, thanks.
Operator
Thank you. We have the next question. Line of Jean Ann Salisbury from Bank of America. Please go ahead.
Jean Ann Salisbury (Equity Analyst)
Can you comment on whether the ethane export contract extensions were at a similar rate to your existing rates or if they were a step down? And then you kind of referenced this potential future expansion at Nederland for Ethane. Can you just comment on whether that's partially due to the current Iran conflict bringing forward interest or if that had been kind of percolating?
Mackey McCree
This is Mackey again. Yeah. One thing I guess we won't get into for competitive reasons is where our rates are. But certainly certain segments of our business rates have gotten tighter, more competitive and some actually have gotten wider. But we are very excited that we've expanded the vast majority of our ethane contracts into 2041. And as you mentioned, as we've mentioned, we also are very excited about some
Jean Ann Salisbury (Equity Analyst)
very far down the road negotiations that we believe are very close to coming to fruition on not only additional ethane, but certainly significant Ethane expansion. Also additional propane. What our commercial teams do, they extract as much value as they can that the market will provide. We're very excited about the rates that we did roll over for 10 years. And we also have really good rates of return, will have good rates of return on the next projects that we announce. That makes sense. Thank you. You decided at the beginning of this year not to move forward with Lake Charles, but I think you were open to kind of potential partners. Have the recent events in Iran driven any new interest from potential partners?
Tom Long (Co Chief Executive Officer)
Listen, this is Tom Long and I think the short answer to that is no. There's been some light interest, some inbounds, but overall there's not been anything of any meaningful discussions on any type partners on that. So we're still open, very much open to looking at ideas for Lake Charles, especially with us providing all the upstream benefits that the connectivity to our pipes and everything else. So we're open for that. But I wouldn't guide you to anything, any meaningful discussions.
Jean Ann Salisbury (Equity Analyst)
Very clear. I'll leave it there. Thank you.
Operator
Thank you. We have the next question. Keith Stanley from Wolf Research, please go ahead.
Keith Stanley (Equity Analyst)
Hi, good morning. Wanted to follow up on what you're looking at for the next potential ethane export project. Could this Be something similar size to what you did with the satellite JV timeline and what customers you're targeting on that. If it's Chinese customers or others.
Mackey McCree
Yeah, this is Mackey again and Adam may want to follow up on any of this, but yeah, once again won't of course get into specifics on companies or countries. But it is fair to say we are chasing ethane markets all over the world. Certainly there are some still in China, of course, but there's also others in other countries that are building crackers that we are pursuing and feel confident we will that will be a part of our next expansion. So I'll put it this way. There's probably between 500,000 to 750,000 barrels of ethane interest around the world on new crackers. And so wherever the best margins are, the best volumes are and the best customers for our business, those are the companies we're chasing.
Keith Stanley (Equity Analyst)
Okay, so it sounds like it could be as big as satellite type sizing based on that demand, I would think.
Jackie Colettes (Equity Analyst)
So it's good to see the company
Mackey McCree
have two straight quarters of gas pipeline projects that are meaningful with Springerville.
Jackie Colettes (Equity Analyst)
As you look forward, are there any
Adam
interstate gas pipes in particular that you'd highlight as seeing potentially meaningful growth opportunities or demand increases? Just what stands out on the interstate side in your system for sizable investments?
Operator
It's Mackie again. As we've announced and that was discussed already, we're very excited about FGT and those expansions. It seems like that's never ending. But the volume growth in the Southeast is just incredible how that pipeline just keeps needing to be expanded. So who knows, Wouldn't be surprised if by the end of this year we'll be looking at expanding that pipeline again. And so when you say that, you go, where's all the gas coming from? So there's definitely a need to move more gas from west to east. As everybody knows, we had an open season for our South Mississippi project and we're not to FID by any means on that. However, we've made a lot of headway. That pipeline connect kind of the Perryville area to several pipelines, but predominantly to fgt. So that would be a good supply source for that. That's very viable project that we hope to get to FID over the coming months. And then if you look throughout the country, there's opportunities. But right now we're focusing on bringing online the pipelines that we're building. Hugh Brinson DSW and fully filling up all of our other pipeline assets, which we've been able to do throughout the country. So that's kind of where our vision is right now in the interstate pipeline expansion opportunities.
Julian Smith
Thank you.
Mackey McCree
Thank you. We have the next question. Line of Jackie Colettes from Goldman Sachs. Please go ahead.
Rahm Moska
Hi. Thank you so much for the time. I first wanted to focus on just the NGL business. You noted record volumes across. But how are you thinking about your NGL pipeline recontracting in the context of deeper or gassier benches in the Permian?
Mackey McCree
Yeah, very competitive. A lot of NGL pipelines have been announced. As we always say, we don't really worry about what others announce. We worry about ourselves. With us bringing on more cryos and, and also chasing NGL liquids from third party cryos. Our team has been very aggressive. We are very optimistic over the coming year of replacing volumes that may be coming off over the next year or two. We also are adding a little bit of capacity. We've got 90,000 a day that we'll have ramped up by next year. And we are highly confident over the next year or so that we will, similar to our other NGL businesses, frac, export, etc. That we will have the vast majority of that locked in at least into the 2000s, you know, early 2000s. But there is, there are a lot of barrels, a lot of plants being built, and we're very optimistic about keeping our NGL pipeline full.
Rahm Moska
God, I appreciate Jackie.
Mackey McCree
Back off. Just to piggyback on Mackie's comments too, the one thing you have to remember with our franchise as well is all of these plants that we're building are going to have significant NGL supplies. And so we have the luxury of generating a lot of our own growth on these pipelines. And that really allows us to be able to have a great line of sight and keeping our pipelines full and keeping them full at reasonable rates.
Operator
Got it. Understood. And then just wanted to touch on the Bayou Bridge expansion project. What is driving the customer demand there? Is part of that driven by exports specifically? And if so, is there an ability for additional expansion opportunities for crude to move that more out east from here?
Mackey McCree
Hey, this is Adam. So Bayou Bridge is really just driven by increased baseload customer demand. So that pipe has continued over the last several years to operate at or near capacity and we've seen strong results from it. And we're able to go out and enter into recontracting with one of our original shippers on that to deliver to their refinery and so we were able to not only extend the terms out, but to increase the volume and underpin expansion. We've also seen more demand further east into the St James Market. So all those things are really, really leading to the increased demand on Bayou Bridge. Really not so much related to anything from exports there.
Adam
Great. Thank you so much.
Manav Gupta
Thank you. We have the next question on line of Julian Smith from Jefferies. Please go ahead.
Operator
Hi, good morning, everyone. This is Rahm Moska on for Julian. Just wondering if the disruption that you've seen in the international LPG markets in the wake of what's happening in Iran has that maybe cause you to revisit projects such as a Panamanian LPG pipeline. Wondering how that factors into what you guys could potentially do on the LPG side.
Tom Long (Co Chief Executive Officer)
It's Mackey again. Yeah, same thing, same common statement we all keep making. We are incredibly well positioned to deliver products, ethane, propane, butane for the international market. And there's no question that's going to continue to grow for many years to come. Estimations are for the next 15 to 20 years, those product demand will grow by 3 to 5%. So we're very well situated and you know, the Panama Canal project, if it comes to fruition, we think is a game changer. We hope we're part of that project. We believe we will be and it will be the go to place for much of the world. Instead of worrying about all the dynamics getting through all the canals and all the straits and all the issues dealing with getting products to the markets, so many of these companies and countries will just cross the Pacific, load up and go back. No waiting time, no nothing. And we have more than enough product ourselves alone, plus with the rest of this country to keep that project once it comes online fully loaded. So we hope that gets to the end zone. We think it will. We think it will be a huge benefit to our country, a huge benefit to Panama, and more importantly, a huge benefit to the world.
M
Appreciate it, Mackie. And maybe sticking with the LPG theme, seems like we're seeing a lot of positive data points around in basin demand in the Northeast. Wondering how that could set up your franchise, your NGL and export franchise in the Northeast for expansions and what potential tailwinds you could experience there if you do start to see some more, some more gas growth in the Marcellus Utica.
E
Thanks. Yeah, we keep saying this, how well positioned we are, but my goodness, there's nobody even close to as well positioned as we are with the three pipelines that we have to move products from west to east in the Northeast, our continued ability to expand, excuse me, expand our capabilities. For example, we're adding 20,000 a day of ethane. Not huge, but it's definitely an expansion. We have the capability of adding a lot more capacity at Marcus Hook and our teams are focused right now on the contracts that end over the next four or five years of extending those out. We're excited about how those are going. So that's going to continue to be a very great asset and revenue generation segment of our business and we have a great team to maximize on that. And yeah, I don't know what the question is. We've seen talked about this before this call. We've seen The Northeast Marcels, Utah kind of hang around 33, 34, 35 BCF forever. It has the potential to grow significantly. However, you got to make sure you have enough pipeline infrastructure. MVP Rover helped that a lot. But we don't know where ultimately that will go. But we know we're very well positioned to maintain the the business we have today and to grow it as needed as that basin expands.
M
Really helpful color. Thanks for the time everyone.
B
Thank you. We have the next question line of Manav Gupta from ubs. Please go ahead. Thank you.
N
Congrats on a good quarter. Just wanted to ask you about the two FGT projects, the prospects over there, any gating items before you can move to fid and the kind of benefits that those two projects offer. And the second follow up question is on the call you talked about getting more Canadian light sweet crude into the US for an open season that's going on. Can you talk a little bit more about that also? Thank you so much.
E
You bet. This is Mackey. I'm going to start first and Adam will finish with the second. I believe you said fgt, so yeah, that project has no contingency. We're already out there ordering compressors, order and pipe. We will be completing that over the next several years and we're very excited about that. As far as the Florida project, South or South Florida project, we're bound to move forward. The customers do have some options that we're waiting them to exercise that options, but there's about a 90 plus percent chance they will and that that will reach full FID. But there are 30, 60 days left for them to make some elections that we've got to wait to them to make before we ultimately bring that project to full fid. So the second part of your question
H
as it relates to the Canadian light on dapl. Yet we continue to be really excited about that project and reaching FID later this year. Enbridge has launched the open season and we're in that process right now, but kind of continued theme on this call of the world needing more North American energy surety of supply. Even before the Iran conflict, Canadian volumes were expected to see significant growth between now and the end of the decade. And what we know is that MLO2 is the right project at the right time and the only project that's out there in the market that can provide the needed egress for that growth. And that was growth before the war started, which subsequently we expect there to be more. So we're really excited about MLO2 and look forward to having more to talk about that later this year.
N
Thank you so much and completely agree on MLO2.
B
Thank you ladies and gentlemen. That was the last question. I would like to turn the conference over back to Mr. Tom Long for any closing remarks.
C
We really appreciate all of you joining. As you can see, we've got a lot of great projects to talk about. We've got a great outlook, not just the quarter we just reported here, but for a long time to come.
E
But as you continue to look at
C
these projects and how they're supported by good long term contracts with a good mix of not just supply side but With a lot of the discussion today around contracts that go out more than 20 years, you can see why we remain so optimistic and so excited about what we're doing. But thank all of you for joining us today and we definitely look forward to any follow up questions you have and having discussions with you.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
Login to comment