Energy Transfer LP

NYSE:ET

Earnings Call Analysis

Record Growth and Strategic Expansions Drive Future Gains

Energy Transfer reported robust financial performance for Q2 2024, with adjusted EBITDA climbing to $3.76 billion from $3.12 billion a year earlier, driven by record volumes in crude oil and NGL pipelines, as well as NGL exports. DCF rose to $2 billion, up from $1.6 billion. Key expansions include the acquisition of WTG, enhancing Permian operations, and a new JV with Sunoco in the Permian Basin. 2024 adjusted EBITDA guidance was raised to $15.3-$15.5 billion. Significant investment continues with anticipated 2024 CapEx of $3.1 billion, focused on NGL and refined products.

Robust Financial Performance

Energy Transfer reported a strong financial performance in the second quarter of 2024. Adjusted EBITDA rose to $3.76 billion from $3.12 billion in the same quarter of 2023. Distributable cash flow (DCF) also saw a significant increase to $2 billion from $1.6 billion in the prior year. These results were achieved despite over $80 million in transaction expenses. Without these costs, adjusted EBITDA would have been over $3.8 billion.

Segment Highlights

The company experienced record volumes through its crude oil and NGL pipelines, as well as record NGL exports. The NGL and Refined Products segment posted adjusted EBITDA of $1.07 billion, up from $837 million in the second quarter of 2023. This growth was attributed to increased transportation, fractionation, and terminal operations. Similarly, the Midstream segment saw a rise in adjusted EBITDA to $693 million from $579 million, driven by the addition of Crestwood assets and higher volumes in the Permian Basin.

Strategic Acquisitions

In July 2024, Energy Transfer completed the acquisition of WTG, enhancing its access to growing supplies of natural gas and NGL volumes. Integration of these assets is underway, and the company is optimistic about the benefits this acquisition will bring. The Red Lake 3 processing plant, with a capacity of 200 million cubic feet per day, has already been placed into service following this acquisition.

Joint Ventures and Collaborations

Energy Transfer also announced a joint venture with Sunoco LP in July 2024, combining their respective crude oil and produced water gathering assets in the Permian Basin. This partnership aims to expand market and service offerings, highlighting the synergy within the Energy Transfer family.

Growth Projects

Several growth projects are in progress, including expansions at the Nederland and Marcus Hook export terminals and a 90,000 barrels per day expansion of the Lone Star Express, scheduled for completion in 2026. Additionally, the company approved a new fractionator at Mont Belvieu with a design capacity of 165,000 barrels per day, expected to be operational by Q4 2026.

Natural Gas and Power Generation

Energy Transfer is well-positioned to meet the growing demand for natural gas, with extensive interstate and intrastate pipeline networks. The company serves gas-fired power plants in 15 states and recently signed deals to provide over 500,000 MMBtus per day across its systems. Furthermore, Energy Transfer is developing eight 10-megawatt natural gas-fired electric generation facilities in Texas, expected to enhance system reliability by 2025-2026.

Financial Guidance and Credit Rating

Energy Transfer has updated its 2024 adjusted EBITDA guidance to a range of $15.3 billion to $15.5 billion, up from the previous range of $15 billion to $15.3 billion. This increase reflects the acquisition of WTG and the base business's strong performance. The company's 2024 growth capital expenditure is now expected to be approximately $3.1 billion, mainly allocated to the NGL and Refined Products and Midstream segments. Additionally, Moody's upgraded Energy Transfer's senior unsecured credit rating to Baa2 in June, underscoring the company's strengthened financial position and balance sheet.

Earnings Call Transcript 2024-Q2

[Operator]

Good day, and welcome to the Energy Transfer Q2 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I'd now like to turn the conference over to Tom Long, Co-CEO. Please go ahead, sir.

[Thomas Long, executive]

Thank you, operator. Good afternoon, everyone, and welcome to the Energy Transfer Second Quarter 2024 Earnings Call. I'm also joined today by [ Mackie ] McCrea and 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 afternoon. As a reminder, our earnings release contains a thorough MD&A that goes through the segment results in detail, and we encourage everyone to look at the release as well as the slides posted to our website to gain a full understanding of the quarter and 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 and information currently available to us, and are discussed in more details in our Form 10-Q for the quarter ended June 30, 2024, which we expect to file tomorrow, August the 8th.

I'll also refer to adjusted EBITDA and distributable cash flow, or DCF, both of which are non-GAAP financial measures. You will find a reconciliation of our non-GAAP measures on our website.

I will start today by going over our financial results for the second quarter of 2024. We generated adjusted EBITDA of $3.76 billion compared to $3.12 billion for the second quarter of 2023. This number includes over $80 million of transaction expense. Absent these transaction costs, adjusted EBITDA would have been over $3.8 billion.

We had record volumes through our crude oil and NGL pipelines as well as record NGL exports. We also saw a strong performance from our [ NGL ] fractionators and our Refined Products pipelines and terminals. DCF attributable to the partners of Energy Transfer, as adjusted, was $2 billion compared to $1.6 billion for the second quarter of 2023.

And for the 6 months of 2024, we spent approximately $1 billion on organic growth capital primarily in the Midstream and NGL and Refined Products segments, excluding SUN and USA Compression CapEx.

Now turning to our results by segment for the second quarter, and let's start with NGL and Refined Products. Adjusted EBITDA was $1.07 billion compared to $837 million for the second quarter of 2023. The increase was primarily due to growth across our transportation, fractionation and terminal operations, including records in both Mariner East and Permian pipeline volumes as well as NGL exports. In addition, we had higher gains from the optimization of hedged NGL inventory.

For Midstream, adjusted EBITDA was $693 million compared to $579 million for the second quarter of 2023. The increase was primarily due to the addition of the Crestwood assets as well as higher volumes in the Permian Basin.

For our Crude Oil segment, adjusted EBITDA was $801 million compared to $674 million for the second quarter of 2023. The increase was primarily due to record crude oil transportation throughput and increase in our total crude oil exports, which were up 11% as well as the acquisitions of the Lotus and Crestwood assets in May and November of 2023, respectively. Excluding these acquisitions, adjusted EBITDA and crude oil transportation volumes on our base business increased 4% and 8%, respectively.

In our Interstate segment, adjusted EBITDA was $392 million compared to $441 million for the second quarter of 2023. During the quarter, we saw higher contracted volumes on Trunkline, [ Pebble ], Gulf Run and MRT. This was offset by lower operational gas sales, maintenance project cost of $12 million as well as a $35 million reduction in revenue for shipper refunds related to our [ Pebble ] [ rate ] case.

For the Intrastate segment, adjusted EBITDA was $328 million compared to $216 million in the second quarter of last year. The increase was primarily due to approximately $75 million of increased gains related to pipeline optimization opportunities as well as favorable storage optimization opportunities.

In July 2024, Energy Transfer completed the acquisition of WTG, which provides Energy Transfer with increased access to growing supplies of natural gas and NGL volumes and enhances our Permian operations and downstream businesses. Integration of the combined assets is underway, and we are really excited about the great customer base and the growing gas supply behind this asset.

Since closing the transaction, the 200 million cubic foot per day Red Lake 3 processing plant was placed into service. We expect volumes to ramp up quickly as more residue takeaway becomes available.

Also in July 2024, Energy Transfer and Sunoco LP announced the formation of a joint venture combining the respective crude oil and produced water gathering assets in the Permian Basin. This is another exciting opportunity that highlights the creativity and optionality our family of partnerships brings to the table when we work together to expand our market and service offerings for our customers.

Now, turning to our growth projects, and starting with our Nederland and Marcus Hook export terminals. Construction of the expansions to our NGL export capacity at Nederland continues to progress and we remain on schedule for an anticipated in service in mid-2025 for the initial phases of the project. And at our Marcus Hook terminal, construction continues to progress on the first phase of an optimization project.

Turning to Lone Star Express, our 90,000 barrels per day expansion project remains on schedule to be in service in 2026, bringing our total capacity of NGL transportation to over 1 million barrels per day out of the Permian Basin.

We recently approved our [ ninth ] fractionator at Mont Belvieu. Frac IX will have a design capacity of 165,000 barrels per day and is expected to be in service in Q4 of 2026. This will bring our total fractionation capacity at Mont Belvieu to more than 1.3 million barrels per day.

In addition, we recently placed a previously unutilized 2 million barrels butane storage well back into service, bringing our current NGL storage capacity at Mont Belvieu to approximately 62 million barrels.

Now taking a look at our Permian processing expansions. Construction continues on upgrades to our existing processing facilities, which will add approximately 200 million cubic feet per day of processing capacity in West Texas.

And in June, we announced plans to construct the 200 million cubic feet per day Badger processing plant in the Permian Basin. This plant, which is expected to be in service in mid-2025, will utilize an idle plant that is to be relocated to the Delaware Basin, which will help save capital versus building a new plant.

In North Louisiana, we placed [ trains ] 1 and 2 of our Ajax treating facility into service in July. These trains have a combined treating capacity of approximately 300 million cubic feet per day.

Now for a brief update on our opportunities around power generation. With forecast for electricity demand growth becoming increasingly bullish and the need for grid reliability becoming progressively more important, it is clear that natural gas will play a significant role in helping meet this demand.

Given Energy Transfer's extensive interstate and intrastate natural gas pipeline footprint, we believe we are extremely well positioned to benefit from the anticipated rise in natural gas needs.

We currently serve gas-fired power plants in 15 states with approximately 185 plants served via direct or indirect connections throughout these states. And we have recently signed deals across our systems to provide gas loads of over 500,000 MMBtus per day.

In addition, as mentioned in the last quarter, we have approved the construction of 8, 10 megawatt natural gas-fired electric generation facilities to support the partnership's operations in Texas. We continue to expect these facilities to go into service throughout 2025 and 2026. These facilities are expected to increase system reliability for Energy Transfer and for our customers.

We also continue to make progress on the development of several other growth projects, including our Warrior, Blue Marlin offshore project, Lake Charles LNG, a carbon capture and sequestration project with CapturePoint and Blue Ammonia hubs at Lake Charles and Nederland. We look forward to providing more updates on these projects as customer discussions advance and we bring them closer to FID.

Looking ahead at our 2024 organic growth capital guidance, we now expect 2024 growth capital expenditures to be approximately $3.1 billion, which will be spent primarily in the NGL and Refined Products and Midstream segments. The primary driver of the increases from our previous guidance of $2.9 billion is the addition of growth capital related to WTG and quicker returning projects in the Crude Oil segment related to the Crestwood acquisition.

Now turning to our adjusted EBITDA guidance. We are raising our 2024 adjusted EBITDA guidance to be between $15.3 billion to $15.5 billion compared to our prior guidance range of $15 billion to $15.3 billion.

Our 2024 guidance has been updated to include our acquisition of WTG, which closed on July 15th and outperformance in the base business, even with over $100 million transaction costs also included within our full year guidance. We continue to be excited about our business and the demand for our products and services, both domestically and internationally. We're in a strong position to help meet this demand with strategic optimization and expansion projects that enhance our existing asset base and generate attractive returns.

And we expect to maintain the flexibility to balance organic growth opportunities with further leverage reduction, maintaining our targeted distribution growth rate and increasing equity returns to our unit holders.

In addition, we are pleased to see that in June, Moody's upgraded our senior unsecured credit rating to Baa2, which further demonstrates the strides that we have made to strengthen our balance sheet and financial position.

This concludes our prepared remarks. Operator, please open the line up for our first question.

[Operator]

[Operator Instructions] And the first question comes from Jeremy Tonet with JPMorgan.

[Jeremy Tonet, analyst]

Just wanted to start off, if I could. I appreciate the color on the call. But as it relates to WTG with 1 month in the books, I was just wondering if you could talk a bit more, I guess, on what you see as far as the commercial opportunities there? And similarly, with the JV with Sun on NuStar, just wondering what new opportunities that you see in front of you post this deal?

[Marshall McCrea, executive]

This is [ Mackie ]. I'll start with your first one. We're very excited about WTG. As you just said, we're barely almost 1 month into it. We still have a lot of rocks to turn over. But we couldn't be more excited, not only just the assets itself and the very creditworthy producers that are supporting that with long-term, large [indiscernible] dedications and all that is going to support the [ cryos ]. But what's even more exciting to us that we don't even put in our numbers when we do acquisitions like this is how it's going to really feed into our residue business -- our downstream residue business as well as our Lone Star, NGL transport and fractionation business.

So we're just getting our arms around it. We're very excited about. There's enormous growth in that part of the Midland Basin that we have had a little exposure to on the gas side. So we're very excited and looking forward to a lot of good things come out of that acquisition.

With NuStar, we're excited about that too. Joe Kim has done an incredible job growing Sunoco. They've kind of been in different areas and they're evolving kind of the [ entire ] areas, the pipeline side, and we welcome. We have a really good partnership with them right now in J.C. Nolan that's got really -- gone really well, moving diesel from the Gulf Coast to West Texas. We've got some deals with [ them ] up in the Northeast on transporting our refined products and a lot of stuff going on with them. They're great partners.

We look very much forward to what we're going to do with them in that JV. Once again, that's new news. We're getting our arms around that. But the bottom line is that's going to be a lot better for both of our partnerships and just one-on-one, it's going to be a lot -- add up to a lot more than 3 or 4 on what we're already seeing. We'll provide a lot of benefits to the producers out there as we team up, but also a lot of downstream value for both our partnerships. So we're excited about both of those deals.

[Jeremy Tonet, analyst]

And just want to pivot to the Permian itself, if I could. Curious how you guys see the [ egress ] situation right now across the 3 different hydrocarbon chains and the need for incremental takeaway? Do you still see more discussion with Warrior at this point? And how do you think about the crude oil takeaway side as well?

[Marshall McCrea, executive]

Well, I tell you about -- I'll start with crude oil. We don't see a lot with crude oil. We do see -- there needs to be quite a bit more growth to fill up what's there. We're probably 1 year or 2 away from any concerns around that, at least from our business standpoint, but we'll certainly keep an eye on that. But on Warrior, yes, we've had some questions both internally, but mainly externally about what does the announcement [ going to ] [indiscernible] [ at ] Warrior. I'll just summarize that, 0.

The vast majority of the customers that we've already signed up and we're pressing the sign up over the next 60 to 90 days, have no desire for either their gas to be in South Texas or the markets that are supporting this project. So by no means is that slowing us down. We're very -- and I know we've talked about this quarter after quarter, but it has picked up steam. There is a tremendous market East, not South but East heading through Texas and other parts of the country really.

And so we're very excited about where we sit on Warrior, and I'll just say that I'll be disappointed -- Certainly, I'm implying that we're almost FID, but I'll be disappointed if we're not announcing FID by our next earnings call. But we're working hard and we'll see if we can get there. If we do announce that, it will be fully sold out. We're not going to take any risk on overbuilding out of that basin, but there's still a lot of gas and oil growth for many years to come out of that basin in our opinion.

And then the last one -- you mentioned all 3, but NGLs, we never worry about what others are doing around NGLs. And we will build the necessary pipelines to move NGLs out of that area to meet the contracts we have with our customers.

[Operator]

And the next question comes from John Mackay with Goldman Sachs.

[John Mackay, analyst]

I wanted to -- and you touched on a couple of these drivers, but maybe just a little more on the underlying business performance for the guidance update? Maybe just a little more color there and kind of how that looks for the back half of the year?

[Thomas Long, executive]

Yes, John, this is Tom. I'll start, and then [ Mackie ] can add more on. As we said in the prepared remarks, we feel very good about the base business. And that's the reason why we were able to bring it up in addition to the acquisitions, not just the WTG.

So when you really look at it, I think the optimization group, a lot of the stuff we've been able to do. We just continue to be able to see additional benefits as we look out over the year. But no, it was great to be able to continue to walk the guidance up for the year even in this commodity environment because, as you know, we get a lot of extra [ POP ] when natural gas prices are higher, et cetera. But even with that, we're able to continue to extract good value out of the optimization group.

[John Mackay, analyst]

And then, if we're looking at the CapEx side, obviously, talking about WTG as a bit of a new growth platform to your point on the Midland side. Maybe you could just frame up kind of how you're thinking about your broader CapEx look over the next couple of years now? The footprint is bigger, now that you've kind of pulled in some of the NuStar assets as well, how that should trend versus your [ $2 billion to $3 billion ] you've talked about in the past?

[Thomas Long, executive]

No, that's actually a very, very good question. As you know, we've just now closed on these -- some of these transactions, and we're working through right now. So as usual, we'll come out with our 2025 guidance whenever we get to the fourth quarter earnings release. And at that time, we'll have able to scrub kind of the normal run rate. But you absolutely nailed it with our growth and our scale, our size and with everything we're doing.

Let us scrub that a little bit more. So we won't just do -- give you the 2025 number, we'll also kind of give you that ongoing run rate. But as of right now, we've always had that $2 billion to $3 billion. If anything, it will be probably at that $3 billion, but let us do some more work on that before we give any official long-term run rate.

[Operator]

The next question comes from Keith Stanley of Wolfe Research.

[Keith Stanley, analyst]

First, just wanted to ask on M&A. Most of your recent deals, including WTG, have been buying G&P businesses and leveraging the NGLs. Is that still the main focus for future M&A? Or could you broaden it out? And then with the JV with Sun, could that -- did that partnership potentially play a role in M&A? Or is the JV exclusively about optimizing the existing assets?

[Marshall McCrea, executive]

Yes, I'll start with the end of that question. Yes. Right now, the way that is structured, the JV in the [ Midland ] Basin is not to go out and acquire it. That's not to say that if there's some gathering assets or other assets in that area that fall kind of within that [indiscernible], that we wouldn't approach that together, and that's certainly in our agreement with them. But right now, the main focus is really developing out those systems together and achieving as much of the upside that we can, downstream of that partnership with our other business in the -- further downstream revenues.

[Thomas Long, executive]

Yes. And listen, I'll chime in here. This is Tom -- kind of the first part of your question, just in general, where we focus. First off, we still feel like consolidation is going to occur in the Midstream, similar to what is happening in the Midstream. And when you see how diversified we are across all the commodities, and we go all the way from the wellhead to our -- to the water to our export facilities, we're looking really pretty much across the board. We wouldn't want to dial you into any specific area.

But the way you asked the question was actually very good. Just like what Mackie said on the WTG, we are able to extract a lot of benefits downstream when we, let's say, get into the gathering processes. And it's across all the commodities. It's not tied to any one commodity. So we think that we still have a lot of opportunities there, and we're going to continue to evaluate those opportunities.

[Keith Stanley, analyst]

Second question, with [ Double H ] moving to NGL service out of the Bakken, has that impacted discussions on recontracting Dakota Access at all? And how are you thinking about recontracting on Dakota Access in terms of the timing and terms you're looking for?

[Marshall McCrea, executive]

Yes, Keith, this is Mackie. No, that hasn't really spurred any new thoughts around that. I guess I'd summarize where we're at. We are kind of the pipeline of choice out of there. As you know, we moved more than 50% of the barrels out of the Bakken. We do have the ability to move significantly more if there's any growth and certainly don't hurt our feelings if there's going to be 60,000 to 80,000 barrels that was leaving the basin and now we'll be looking for another way out because we think we'll continue to move the majority of the barrels out of that region.

But we do think that we'll end up through them later, rolling or extending some of the agreements that we have. But we really don't have a lot of angst or concern for the reasons I just said. We offer more flexibility by going to the Mid-Continent refineries and of course, all the way down to the Gulf Coast to the Beaumont, Houston area as well as Bayou Bridge. So we just -- it's unparalleled with the flexibility and the optionality that we're giving for producers. So we sit in a very good position, and we're very confident that we will keep Dakota Access fall at healthy spreads for many years.

[Operator]

And the next question comes from Theresa Chen with Barclays.

[Theresa Chen, analyst]

Going back to the comments related to the downstream synergies following the formation of the Permian JV with Sun, can you talk about what time frame the long-haul pipeline commitments roll over from the legacy NuStar gathering system for the barrels that are not already on your long-haul system?

[Marshall McCrea, executive]

Yes. Theresa, this is Mackie again. No, most of the business that NuStar had now, Sunoco and our JV is just gathering. So it's gathering that base and it's delivering to pipelines like Energy Transfer or other competing pipelines in the area. So that JV is a large area to [ AMI ] that encompasses Energy Transfer's oil gathering business in the Permian Basin, but does not include any of the downstream pipeline, for example, that go to Nederland or up to Cushing. So that's -- we're going to work very closely with NuStar -- I mean, sorry, with Sunoco as part of that JV, but that's just confined in the gathering part of that business.

[Theresa Chen, analyst]

I meant to ask for the barrels that are not committed on to Permian Express, when can you roll them on to Permian Express over the next few years?

[Marshall McCrea, executive]

I'd answer it like this, is that we're probably gathering 1.5 million barrels, and we can move less than that out of it. So we don't have any necessarily dedicated barrels from any particular area other than shippers that have taken space on our pipeline system. So right now, I really couldn't say what exact molecules will come from this JV, may feed into our downstream business. We kind of take it as a whole.

Also, there's different qualities of oil, whether it's WTL or WTI [ to ] come involve. So there's a lot more kind of thought process going into this. But yes, at the end of the day, certainly, this JV and the business of gathering will continue to feed our downstream business, both to Nederland, to our Houston terminal as well as one day, hopefully, to our Blue Marlin project.

[Theresa Chen, analyst]

And can you just provide some incremental detail on the marketing strength in the NGL and Refined Products segment this quarter? What drove that? And how much of that is repeatable?

[Dylan Bramhall, executive]

Theresa, this is Dylan. So that NGL marketing line item, there's a lot of activities that go into that various optimization in the Gulf Coast and the Northeast. Over the last quarter where we really saw the great performances from the Gulf Coast NGL Group. It had a really strong quarter, and it's really comparing back to the second quarter last year when we did have an [ LCM ] write-down on hedged inventory. And additionally to that, we also had some strong margins for both the butane and gasoline blending businesses in the Northeast.

[Operator]

And the next question comes from Spiro Dounis with Citi.

[Spiro Dounis, analyst]

First question, I actually want to ask you guys about your global growth [ transitions ]. I know in the past you've talked about an NGL Panama pipeline. And recently, your name was sort of mentioned alongside another South American oil and gas project. And so I expect that you might not be able to talk about project specifics. But just curious, do you have an ambition to grow on a global level? And is that something that you do under the MLP structure?

[Thomas Long, executive]

Yes. This is Tom. That's the quick answer. We think it's the right thing to do for our partnership here. It makes a lot of sense with all that we've built out across all the commodities. So we continue to evaluate various opportunities when you look across the globe. I will tell you that we will always be very careful with any risk as we look at these. We'll make sure they're good fits for us, that we can bring a lot of value.

But we're well aware of the risk -- country risk, et cetera, that come along with each of these. And it's -- but we once again think that we've got the right team to be able to extract value when you look out globally. But we will -- like I said, it will be credit risk, country risk, et cetera. And when you get involved with some of these various companies that are in these other countries, you can do a lot of stuff with them globally when you look at it. So we will continue at least to evaluate, but be very thorough in our evaluation.

[Spiro Dounis, analyst]

And maybe switch gears back here domestically. This power demand or power gen demand thesis kind of really snuck up on a lot of the market here. And it sounds like you all have a few irons in the fire even on the data center side. So just curious if you could frame for us how you're thinking about the timing of when some of these projects start to show up in earnings? And maybe as we think about the scope and size, are we talking about greenfield expansions here or brownfield? Just help us understand the opportunity in front of you?

[Marshall McCrea, executive]

Yes. This is Mackie. And I'm actually not going to answer your question at first, because I do want to make a statement. I thought about this [ when we were ] preparing, Bill Baerg and his team do a great job of summarizing some of our competitors in their earnings call and how they did and -- kind of interesting as I think about it, about, we've got competitors talk about the oil business, which is the vast majority of what they do. And they talk about their NGL and oil business, which is the vast majority.

They're all natural gas and -- what a blessing and how fortunate we are as a partnership with such great employees running this business and the breadth of our pipeline system, our [ terms ] of our storage throughout the U.S. I mean we're so well positioned to meet this demand growth across the board for natural gas and other commodities. So we feel very fortunate and we're going to take advantage of that.

So in answering your question, we keep hearing about transition for years -- the last 4 years transition. Well, I guess, everybody is kind of seeing the truth. The transition is we're about to transition into untold demand for natural gas, and for that case, also natural gas [ liquid ] internationally.

So as I just mentioned, nobody is better positioned for -- other than the Eastern seaboard. If you look at our pipeline intrastate, interstate network, you look at it, what I just said, we have over 233 Bcf of storage along all of our systems to really meet the demands. We're situated very well to meet all the up end demand.

You mentioned data centers. Yes, we're in 4 or 5 different states, in discussions with multiple data centers of different sizes. Some of them -- or many of them want to put generation on site in only as much as 200,000 or 300,000 Bcf for each one. So it's an enormous opportunity for us.

As I mentioned, we're very advantaged in many of these areas to capture a lot of this business as well as for the power plant demand for natural gas. We see that going up astronomically. We think we can increase the demand here for electricity over the next 6 to 8 years, about 30,000 or 40,000 megawatts at least here just in Texas, and that -- you go to other states, similar-type needs. Once again, we're very well positioned.

And then you add on to that. I mean we've got population growth in Florida and Texas, [ Bahamas ] [indiscernible] all these gas utilities that we'll be feeding and growing our business. You've got [indiscernible] just we're working with -- along with a handful of folks.

If it comes to fruition, the majority of that, we're looking at between 1 and 2 Bcf of natural gas deliveries to our terminals -- close to our terminals for Blue Ammonia and -- [indiscernible] [ crypto ] and on and on. So yes, we're very bullish. I know that's a long-winded answer to your question, but we're -- couldn't be more excited about the transfer -- I mean, natural gas demand growth and how we're going to be able to take advantage of that with our broad system.

[Operator]

And the next question comes from Michael Blum with Wells Fargo.

[Michael Blum, analyst]

I wanted to go back to Kinder Morgan's Double H conversion announcement. I'm wondering if you could possibly participate in this project in any way, either upstream or downstream of Double H, and if you could remind us on the contract terms of the NGL [ vows ] you have from the Crestwood acquisition?

[Marshall McCrea, executive]

Yes. That's a good question, Michael, because that's really where we see a couple of benefits. But one of them is we are chasing a couple of pretty big deals, and we've got available capacity that's already sitting and waiting for us, processing capacity with the Crestwood assets and we do intend to fill that, and now there's competition. Now when you have a monopoly, it's hard to get a good netback price for your producer or for your business, and that's changing.

So we're excited and intrigued that Kinder is doing this. It's kind of something more like we do. So we love that. And like I said, it's not going to hurt our feelings that there may be 6,000 or 8,000 more barrels looking for a home on our Dakota Access.

Now downstream, we certainly are in discussions and we love and feel like we probably will see some of those barrels at a minimum on our frac. But we're just in early discussions and I certainly see that as another potential upside for what Kinder is doing. But mainly, we like what's going on up the basin and what it will do for our own assets up there.

[Michael Blum, analyst]

And then just wanted to get your latest thoughts on what's happening in the Haynesville, North Louisiana? Obviously, there's been legal challenges. Some of that's sort of now transpired. So just wanted to get your latest thoughts there?

[Marshall McCrea, executive]

Yes. Marcellus, Utica and Haynesville, tough areas over the last quarter, a lot of lean gas, a lot of drilling slowing down, even some shut-ins. So we've seen those 2 basins in the Haynesville especially come off, what, 2, 2.5 Bcf, I think, just since the end of last year, but we are seeing it start to recover as prices start to recover.

The enormous reserves in North Louisiana, we have multiple 42-inch pipes running true North Louisiana, actually 3. We've got a Gulf Run extension to the south. We have the ability to increase the capacity on that relatively easy. And we've got a lot of potential to grow there and so does the industry.

When you're talking about the issues in Louisiana, I'll touch on those real quick. We are in a lawsuit with one company, but from a high level, there were 3 companies that were looking for, I think it was 150, 160 crossings of our pipelines. And we deal with this every day, whether it's other pipeline companies or utility companies or electric companies or whatever, it's a normal part of our business.

But what happened was with 2 of these pipeline companies, we needed technical data. We need to work with them on where are they crossing, how are they going to impact our [ right-of-way ]? How are they going to impact our right-of-way -- abrupt [ right-of-ways ]? How are they may be going to adversely possibly affect our safety, our employees?

So it's important to us to have answers to our questions like we always ask and get it. And 2 of the pipelines work with us. We have one pipeline that has rejected or refused to provide that technical data. And all we're doing is protecting our rights and we'll continue to do that as a partnership, and we'll see kind of how that plays out.

[Operator]

And this concludes our question-and-answer session. I would like to return the floor to Tom Long for any closing comments.

[Thomas Long, executive]

All right. We definitely appreciate you all joining us. I do want to add one more comment here at the end. We do get a lot of inbound. I'm going to go back to the global question a little bit here. We have a lot of hard assets, second to none across this country, but another significant asset we just -- we mentioned occasionally, but never mentioned -- emphasized enough is the team -- the human resource side of the team. All the inbounds that we get globally is a huge, huge complement to the second to none team that we have, operations team, BD team. I think it's recognized globally. And that's the reason a lot of inbounds do come to us. And we take it as, like I said, a massive complement that our name is used out there a lot. But anyway, I wanted to make sure I got that in.

But thank all of you all for joining us, and we look forward to talking with all of you with any follow-up questions. Thanks.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.