More mergers and acquisitions are still to come in the US' oil and gas sector, according to the co-founder of one of the country's largest midstream companies that is fresh off a deal of its own.
"Consolidation is absolutely necessary," said Energy Transfer executive chairman and co-founder Kelcy Warren today at the Argus Americas Crude Summit in Houston, Texas.
Energy Transfer has ponied up more than $15bn, mostly in the form of equity, in the past 12 months to grow its footprint even larger in the US. The Dallas-based company will further grow its 125,000 mile pipeline network when its subsidiary Sunoco closes on its $7.3bn acquition of NuStar Energy. This follows the purchase of Lotus Midstream for $1.45bn in March 2023 and Crestwood Equity Partners for $7.1bn in August.
"We just keep gobbling up companies and we do it with equity," said Warren, noting both Lotus and Crestwood have helped Energy Transfer insert themselves in markets to take advantage of pricing spreads between trading hubs.
Buy it over build it
Consolidation is a strategy that has picked up steam in the country's oil patch in recent years, as has the preference to convert existing pipelines rather than start from scratch with new construction in what has become a more onerous regulatory process.
"Do it in Texas," Warren responded when asked for advice on how to build a greenfield pipeline, which comes with a heightened regulatory burden when crossing state lines. This was particularly evident with his company's 750,000 b/d Dakota Access pipeline connecting North Dakota to Illinois.
DAPL got "very, very dirty" behind the scenes while being constructed, according to Warren, but challenges against his "bold" project persist after the US Army Corps of Engineers was told to redo its Environmental Impact Statement (EIS).
"We're unaffected by [the EIS process]. We've been moving oil the whole time," said Warren. "We paid for the EIS, but they're not going to make us move the pipe. There's no possible way. They're certainly not going to shut it down."
Having government that is friendly toward the oil and gas industry is important, Warren said, who is a supporter of Republican front-runner Donald Trump.
By Brett Holmes