Energy Transfer LP ($ET)

Good morning, and welcome to the Energy Transfer First Quarter 2026 Earnings Call. [Operator Instructions] 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.

Thank you, operator, and good morning, everyone, and welcome to the Energy Transfer First Quarter 2026 Earnings Call. I'm also joined today by Mackie McCrea, Dylan Bramhall, 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 morning. As a reminder, our earnings release contains an update to guidance and a thorough MD&A that goes through the segment results in detail, and we encourage everyone to take a look at the press 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 detail in our Form 10-Q for the quarter ended March 31, 2026, which we expect to file later this week. I'll also refer to adjusted EBITDA and 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 and crude oil transportation volumes for the quarter. And for the first quarter of 2026, we spent approximately $1.5 billion on organic growth capital, primarily in the intrastate, NGL and refined products, midstream and interstate segments excluding SUN and 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 and $18.6 billion compared to the previous range of between approximately $7.45 billion and $17.85 billion. This includes a beat of approximately $500 million and 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 and $5.9 billion compared to our previous guidance of approximately $5 billion to $5.5 billion, excluding SUN and USAC. This increase is primarily a result of the addition of several new growth projects, including the construction of the new Springererville lateral off our existing Transwestern pipeline, the construction of pipelines and meter stations to provide natural gas to various power plants and data center sites in Oklahoma and Arkansas, accelerated timing on longer-term projects like Desert Southwest and FGT capital spend and gathering system and compression build-out in the midstream segment, primarily in the Permian Basin associated with recent contract and 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, and we'll start with NGL and 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 and record performance at our Mont Belvieu fractionators. In addition, new chilling capacity placed into service last year contributed to a $50 million increase in earnings as well as record export volumes from our Nederland 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 and 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 and butane for both export and 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 and 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 pipelines and 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 and 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 of 2025. This increase was primarily due to higher contracted volumes and higher rates on several of our pipelines, including Panhandle Eastern, Trunkline, Florida Gas and Transwestern. And for our Intrastate Natural Gas segment, adjusted EBITDA was approximately $437 million compared to approximately $344 million in the first quarter of 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 and our terminals with our exceptionally experienced optimization and operating teams, we were able to capitalize on quickly changing dynamics and market volatility. For a closer look at some of our major projects, and I'll start with the natural gas side of our business, where we continue to see significant demand for our services. We are making good progress on our Desert Southwest Pipeline project. In March 2026, Transwestern Pipeline initiated the FERC prefiling process for the project as previously scheduled, and 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 and communities along the entire proposed pipeline route throughout Texas, New Mexico and Arizona. Our teams continue to actively engage with elected officials, county leadership, landowners and associated communities along the route to communicate project information and updates, and we have engaged with over 500 stakeholders to date. Our discussions have continued to be very positive as existing and potential stakeholders learn more about the expected economic benefits and realize the critical need for a dependable supply of natural gas to help with the transition from coal-powered generation to natural gas-powered generation and to help address significant power needs in the coming years, driven by population and demand growth in Arizona and New Mexico markets. We expect this pipeline to be in service, 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 and extends south to new natural gas-powered generation that is expected to replace 2 coal-powered plants. This project is backed by 20-year agreements and is expected to be in service 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 service in the fourth quarter of this year upon the full build-out of the 400-mile pipeline and 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 1 into service. And we continue to expect Phase 2, which includes additional compression to be in service in the first quarter of 2027. The pipe is fully contracted from West to East, and we also have a growing amount of backhaul volumes committed that are expected to add significant upside. Turning to Florida Gas Transmission or FGT. In February, we completed open seasons for 2 new projects that are supported by 15- to 25-year long-term agreements with anchor shippers. The Phase 9 project, which is designed to expand firm natural gas transportation capacity to multiple new and existing meter stations located across FGT's market area. This project will consist of the construction of approximately 90 miles of pipeline looping as well as new and 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 and compression for delivery in the first quarter of 2028, and we continue to expect the project to be available for service in the fourth quarter of 2028. The South Florida project is designed to enhance the reliability of critical infrastructure and 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 and a new meter station and is expected to be available for service in the first quarter of 2030. Energy Transfer share of the cost for these 2 projects is expected to be approximately $565 million and 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 3 new power plant loads in the state of Oklahoma. We have since added a fourth connection for a total of approximately 300 million cubic feet per day of new gas supply. The first of these connections is in service with 2 more expected in service in the third quarter of this year. The remaining connection is expected to be in service 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 demand in Oklahoma. And since our last earnings call, Energy Transfer has entered into agreements to provide long-term firm natural gas transportation services through our Texas intrastate system to support the NEXUS hybrid campus located in Central Texas, where NEXUS 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, and it is expected to be in service by the end of this year. In addition, we recently entered into an LOI to provide approximately 150 million cubic feet per day of firm natural gas transportation service through our EGT pipeline to support a new data center site in Arkansas. The facility is expected to be in service 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 service to fuel their facilities in Richland, 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, and they continue to have an option to increase their commitment to up to 1 Bcf per day. In addition to these projects, we have multiple ongoing discussions with power plants to provide significant volumes and 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 and is expected to be in full service next month, and we expect volumes to ramp up quickly. And we continue to expect our 275 MMcf per day Mustang Draw II plant to be in service in the fourth quarter of this year. In our NGL segment, we placed the Gateway NGL pipeline debottlenecking project into service 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 service in the second half of 2027 will help support our ninth fractionator at Mont Belvieu that is expected to be in service in the fourth quarter of this year as well as future ethane export expansions. At Nederland, 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 Nederland 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, and 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 and product mix. This expansion is underpinned by a 10-year term extension and volume increase from a demand pull customer and is expected to be in service in Q1 of 2027. I think as all of you can see, we had a lot of great things happen in the first quarter and 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 5 of the last 8 years, we have seen large spreads, optimization and other opportunities that have provided significant upside to our base business. These kinds of benefits, while onetime 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 and impact of current market disruptions and 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 and others, which we expect will contribute to continued growth in 2026. In particular, once our Hugh Brinson Pipeline is in service, it will be extremely well positioned to become a major U.S. 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 and expected to generate mid-teen returns and considerable earnings growth over the next decade or more. Completing these projects safely, on time and 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, and we remain extremely well positioned to help meet the substantial growth in demand 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% and maintaining our leverage target of 4 to 4.5x 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 U.S., including major trading hubs, power plants, data centers, city gates, industrial complexes and other downstream markets, including international markets through our export terminals. This concludes our prepared remarks. Operator, please open the line up for our first question.

We have the first question from the line of Michael Blum from Wells Fargo.

I wanted to just start kind of high level in light of the Middle East conflict that's ongoing, are you seeing any change in U.S. 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 U.S.? And are you seeing any of that in your discussions yet?

Michael, this is Mackie. As I look around the room, as you're asking that question, there's like 5 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 U.S. for all products, LNG, NGLs, oil, et cetera. 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. 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 U.S. for supply regardless of how long that war may last. And an example is in North Louisiana, Haynesville, we're projecting about 800,000 Mcf of growth into our processing, treating and downstream assets in North Louisiana by August or September. But clearly, the producers in North Louisiana are drilling and are going to bring on DUCs 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 growth of drilling. Not real clear how quickly all the companies in all the basins are going to pick up, but the bottom line is there's going to be increased drilling in Greece, increasing DUCs bringing on new wells from DUCs throughout the country, and we're very excited about where we sit.

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 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?

Kind of yes to all of the above. As I mentioned earlier, whether we're meeting with companies are looking at building assets over here and/or buying products over here, everybody is turning to the U.S. 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 2030s and 2040s 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 2030s. So regretfully, we don't have a bunch of spot where we have 4 or 5 ships where we could be printing a lot more money. But fortunately, we do have spots available. The Flexport a project that we just completed that we're starting to fully ramp up. We do have at least 1 or 2 slots a month that we can benefit from these higher spreads. And to answer your -- 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 U.S. for supply.

We have the next question from the line of Gabe Moreen from Mizuho.

I just wanted to ask about guidance. It sounds like on the one hand, in the slide, you didn't really shift your allocation between spread and commodity-based margin through the year and you're using the forward curves. On the other hand, I think you noted in your remarks, you're hopeful to exceed 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. Tom?

Sure, Gabe. Let me walk you through some additional thoughts rather on the full year guide. I think I'll 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 million, I want to point out that about $300 million of that would probably be considered onetime as we describe it. And as Tom pointed out, we call it onetime, but we see this almost every year at Energy Transfer with our assets and people. So how much of that really you call on timing is up to the individual, I guess. But then the rest of it is really a result of the tailwinds to the business. And so as you see, we raised guidance by $750 million at the midpoint. This is really based on line of sight to the continued 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 is a result of the conflict in the Middle East, making it clear, as Mackie pointed out, the need for the reliable U.S. 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 it will never go back to exactly how it was pre-conflict. We saw this with the Ukraine conflict and today's issue just drive home even more the need to -- the reliability of the energy from the U.S. 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 it is based on a conservative price deck going forward. And if prices remain anywhere near where they are right now, that will push us to the high end of the guiding range and potential to exceed that. And so I think that should help clear up how we're thinking about the balance of the year here.

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 lateral was contemplated in the original 2.3 Bcf on Desert Southwest or whether there's potential any upsizing to the base project. And then also as far as potential for further laterals along those lines? I know you've talked about the potential to upside the pipe. And then lastly, on that, anything changed in terms of the regulatory approval or time lines given the lateral associated with the project now?

Yes, this is Mackie again. So kind of separate topics, talking about the [ SpringerBverry ] 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 lateral opportunities off that? Sure. There's always going to be stuff we're looking at. Separate that from your question on Dental Southwest, absolutely, all along through to 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. We there's a lot of volume, a lot of demand that we're chasing. And so we have 0 concerns about selling the remaining portion of that gas through our -- the largest pipeline that's ever been built in the U.S. 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 North San Juan.

We have the next question from the line of Theresa Chen Chen from Barclays.

Going back to the macro side of things, assuming an uptick in U.S. production materializes and accelerate 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 how does that translate to additional opportunities for Energy Transfer?

Yes. 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 can bring back online quickly across the Mid-Con. 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, the Eagle Ford. I think those would be the first place at that point where we have capacity either available or quickly available that we can bring online with little to no capital and be able to move significantly higher volumes. So that's probably what is on the operational leverage. But Mackie, I don't know if you want to comment any more on bottlenecks in the system.

Yes. Thanks, Dylan. Yes, as far as bottlenecks, you think about, for example, our NGL segment and as we -- 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. So 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 II. We are slowly ramping that up and benefiting from whether ethylene or ethane or propane or the best price margins, we 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 to 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 cryals 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, 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 enormous opportunities for producers to drill away as much as they want to drill because there'll be plenty of capacity for a number of years to come. So -- but really bottleneck-wise, I don't really see anything anywhere else. We try to stay ahead of where the production and where our customers are growing and connecting that with the markets downstream and very excited about our ability to kind of stay ahead of that and create more value for our partnership.

Great. 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?

This is Mackie again. If you think about Hugh Brinson, and it's coming online, we're going to start ramping it up next quarter, and we will have a full Phase 1 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 our entire intrastate pipeline network in Texas, we are -- 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 Maple area, south of Dallas-Fort Worth, out of East Texas, even from Katy, we're very close to signing a large transportation deal to a data center and the source supply is going to be Katy. 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've 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 supply for our customers to the market demand areas they're asking us to deliver gas to.

We have the next question from the line of Jeremy Tonet from JPMorgan.

Just wanted to continue with the bottleneck 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 unfold. We saw some competitors announce some new plants this quarter. So just wondering any color you can provide there and how you see that developing?

Okay. This is Mackie again. Yes, Brian and Alex and our G&P team have done such a great job. And yes, we hear about announcements from our competitors in their plants, and we just kind of pay attention to what we do. What we don't do is get out 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 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 G&P doesn't come to us and say we need to add another one very likely in the Delaware. That'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 we 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 into the cryos and then ultimately deliver into our downstream assets, both NGL and revenue pipelines.

Got it. That's helpful. And then just switching to the Haynesville, if I could, the 800, you talked 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 pull? Or just any more color on how you see this unfolding over the course of the year?

Yes. 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 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. That's -- 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.

Got it. 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 a global macro volatility.

This is Adam. So we've definitely seen a ramp-up across our docks on all products. So I think with the conflict 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 of weeks to 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.

We have the next question from the line of Jean Ann Salisbury from Bank of America.

Can you comment on whether the ethane export contract extensions were at a similar rate to your existing rates or if there were a step down? And then you've kind of referenced this potential future expansion at Nederland for ethane. Can you just comment on whether that's partially due to the current Iron conflict bringing forward interest or if that had been kind of percolated?

This is Mackie again. Yes, 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 and as we've mentioned, we also are very excited about some 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 but also additional propane. So 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 on -- will have good rates of return on the next projects that we announced.

That makes sense. And 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?

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 of 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.

We have the next question from the line of Keith Stanley from Wolfe Research.

I 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, time line and what customers you're targeting on that, if it's Chinese customers or others?

Yes. This is Mackie again, and Adam may want to follow up on this. But yes, once again, I won't, of course, get into specifics on companies or countries, but it is fair to say we are chasing the 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, the best customers for our business, those are the companies we're chasing.

Okay. So it sounds like it could be as big as satellite type sizing based on that demand, I would think.

Or yes, or larger.

Got it. Second question, so it's good to see the company have 2 straight quarters of gas pipeline projects that are meaningful with Springererville. As you look forward, are there any 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?

This is Mackie again. As we've announced and as was discussed already, we're very excited about FGT and those expansions. It seems like that's never ending with the volume growth in the Southeast. It's just incredible how that pipeline just keeps needing to be expanded. So who knows? I wouldn't be surprised that by the end of this year, we'll be looking at expanding that pipeline again. And so when you say that, you go, where is 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 have not to FID by any means on that. However, we 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 a 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, Huron 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 on the interstate pipeline expansion opportunities.

We have the next question from the line of Jackie Koletas from Goldman Sachs.

I first wanted to focus on just the NGL business. You noted record volumes across the system. But how are you thinking about your NGL pipeline recontracting partly in the context of deeper or gassier benches in the Permian?

Yes. We -- very competitive. A lot of NGL pipelines have been announced. As we always say, we don't really worry about what others announced. We worry about ourselves with us bringing on more cryos 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 2. We also are adding a little bit of capacity. We've about 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, et cetera, that we will have the vast majority of that locked in at least into the 2030s, early 2030s. But there are a lot of barrels, a lot of plants being built, and we're very optimistic about keeping our NGL pipeline full.

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 into keeping our pipelines full and keeping them full at reasonable rates.

Got it. Understood. And then just wanted to touch on the Bayou Bridge expansion project. I mean what is driving the customer demand there? I mean 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?

Yes. 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 leading to the increased demand on Bayou Bridge, really not so much related to anything from exports there.

We have the next question from the line of Julien Smith from Jefferies.

This is Ron Mosca on for Julien. 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 caused you to revisit projects such as the Panamanian LPG pipeline. Wondering how that factors into what you guys could potentially do on the LPG side.

This is Mackie again. Yes, 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 10 to 20 years, those product demand will grow by 3% to 5%. So we're very well situated. And 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. The -- so many of these companies and countries will just cross the Pacific, load up and go back, no waiting time, no enough. And then 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 through the inzone. 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.

Great. Appreciate it, Mackie. And maybe sticking with the LPG theme. It 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 tailwind you could experience there if you do start to see some more gas growth in the Marcellus, Utica?

Yes. 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 3 pipelines that we have to move products from West to East in the Northeast, our continued ability to 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 in over the next 4 or 5 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 yes, I don't know what the question is. We've seen -- we talked about this before this call. We've seen the Northeast, Marcellus, Utica 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 business we have today and to grow it as needed as that basin expands.

We have the next question from the line of Manav Gupta from UBS.

Congrats on a good quarter. Just wanted to ask you about the 2 FGT projects. The prospects over there, any gating items before you can move to FID and the kind of benefits that those 2 projects offer? And the second follow-up question is, on the call, you talked about getting more Canadian light sweet crude into the U.S. to an open season that's going on. Can you talk a little bit more about that also?

You bet. This is Mackie. I'm going to start first, and Adam will finish with the second. I believe you said FGT. So yes, that project has no contingency. We're already out there ordering compressors order in 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 option, but there's about a 90-plus percent chance they will, and that will reach full FID, but there are 30, 60 days left for them to make some elections that we've got to wait them to make before we ultimately bring that project to full FID.

This is Adam. So on the second part of your question as it relates to the Canadian light on DAPL, Yes, we continue to be really excited about that project and reaching FID later this year. We have -- 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 MLO 2 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.

Completely agree on ML2...

9 Ladies and gentlemen, that was the last question. I would now like to turn the conference over back to Mr. Tom Long for any closing remarks.

Listen, thank you. We really appreciate all of you joining. 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. But as you continue to look at these projects and how they're supported by good long-term contracts with a good mix of not just supply side, but on the demand side 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.

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