Brent Secrest: Yes, Michael, if you just look at in the third quarter where the LPG cargoes went, 55% went to Asia, 18% went to the Americas, 17% Europe and 9% Africa. If you were to go trend that and look at the incremental molecule, where it’s going, Asia is far and away the leader of where each molecule goes. On the demand side of what that LPG is used for, about one-third is used for petchem use, two-thirds is used for call it human needs cooking and heating. Tony gave us some numbers. I want to say it was yesterday. I’m going to try to look at these notes, but about IEA came out and said 1.5 billion people use LPGs for cooking and heating. If you look at the estimates through 2030, there’s about 2 billion people who don’t have access to it.
If you look at the same consumption per capita those billion people would need about 3 million barrels of LPG between now and 2030. And if you look at Tony’s forecast, he’s a little shy of 600,000 barrels of LPG from the U.S. through 2030. So the Middle East will make up some of that. But at some point, the U.S. producer is going to have to step up and fill that void.
Jim Teague: Hey, Chris, what was that organization that said propane and natural gas was transitional?
Chris D’Anna: Yes, Jim. MSCI recently came out and upgraded Enterprise to an A rating for their ESG score. And I think that really is a result of the stats that branches throughout. Again, if you think about what LPGs do in improving the quality of life for people in, call it the Southern Hemisphere, that is an absolute game changer. And needing 3 million barrels a day of an additional LPGs between now and the end of the decade is really the reason why MSCI came out and said, okay, LPGs are now a green fuel, if you will.
Jim Teague: I’d like to add relative to solar. And let’s think about Africa. Okay? It’s going to happen. They’re going to use it. But solar, no matter how you think about it, is not a good choice to cook and eat homes with. It simply is not. And people in Africa, they’re going to get more. And natural gas and electricity are very expensive to move around. That’s what we’ve seen over the last ten or twelve years with LPG. Get a lot of energy, not hard to move around. It’s not hard math.
Chris D’Anna: You just fill up a little tank.
Jim Teague: Yes, sir. Absolutely.
Brent Secrest: I go back to paraphrase Daniel Juergen, this world has never done energy transition, it has only done energy addition. And I think we’re going to see more of that.
Michael Blum: Great. Thank you for all the color. I appreciate it.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Keith Stanley with Wolfe Research. Your line is open.
Keith Stanley: Hi, good morning. I had a question on the quarter and then a follow up on the NGL pipe. So on the quarter, just NGL marketing has been softer this year than last year. Any drivers you’d highlight? And the frac margin too. You had a huge step up in volumes with the new frac, but the per unit margin was down a lot. Anything you’d call out there?
Jim Teague: You want to talk to frac? Zach?
Randy Fowler: I’ll start with the frac. So this quarter we had two turnarounds on two of our fracs, so that increased our cost. Obviously there, there is some uplift that we get from blend margins, which were down year-over-year and then ERCOT pricing. So just the hot summer hit us this year relative to last year.
Brent Secrest: NGL marketing. Keith? I think most of it just has to do with structure in the market on a storage. So if you look back when COVID happened, we put on obviously a lot of contango. Some of that was extended further along, dated. And then we had some backwardation opportunities last year that, frankly, we just didn’t see those opportunities this year. It’s been less volatile in general this year. There just really hasn’t been a lot of spreads.
Keith Stanley: Got it. That’s helpful. And then sorry, I have one on the NGL pipe. So just want to confirm. It’s a brand new pipe. So it’s a greenfield new build. And if there’s any way to give more color on what you see as the disadvantages of some of the other alternatives, like a cheaper looping of Shin Oak or even leveraging some of the third party capacity that’s getting added just because it’s a lot of capacity, I think that the market’s seeing getting added all at one time.
Jim Teague: We looked at partial loops, and we didn’t think that served what we needed. We decided to just build the entire pipe. And I’ll remind you what was Chaparral’s capacity 130,000 barrels a day. Then 130,000 barrels a day. We’ve got to move on other pipe. We get Shin Oak, you’re around 600,000 barrels a day right now.
Brent Secrest: 600.
Jim Teague: And we need Seminole. And frankly, we don’t leverage third party pipes we put it in our own.
Keith Stanley: Thank you.
Randy Burkhalter: This is randy. We have time for one more question.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Neel Mitra with the Bank of America. Your line is open.
Neel Mitra: Hi, good morning. Thanks for taking my question. I had a question about the conversion and where you’ll be offloading some of the crude volumes. So from what I understand, Midland -to-ECHO 2 is moving some volumes, and the whole Midland-to-ECHO system is relatively full. So when you move this to NGL service, where do the crude barrels go?
Jim Teague: Midland-to-ECHO 1. And we can get that up to 600,000 barrels a day. There’s a marginal difference in cost, but more than made up for what we do with Seminole and NGL service.
