Enterprise Products Partners L.P. (EPD) Earnings Call Transcript & Summary

Good morning, everyone. And welcome to the Enterprise Products Partners Inaugural ESG Day. We are grateful that you could join us today. We have a line-up of speakers who will be covering a range of topics relevant to our stakeholders as it relates to sustainability topics. Tomorrow, we will discuss our traditional analyst content. During production, we're taking measures to ensure appropriate social distancing between our speakers. Before I turn the presentation over to our first speakers, I'd like to take the opportunity to say that during these presentations today, our speakers may make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, based on the beliefs of the company, as well as assumptions made by and information currently available to Enterprise's management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. Now I will turn the presentation over to our first speakers who need no introduction, Co-CEOs, Jim Teague and Randy Fowler.

Good morning. Jim, welcome back. First time since 2018.

Yes. I think the last time we had an Analyst Day, I didn't make it because I cracked 3 ribs the day before.

How did you do that?

Well, ran to pinch hit for me. And she said something about -- I was at a softball game or something, and fell and crack my ribs. So I learned a long time ago from my daddy. That's my story, and I'm sticking to it.

There we go. All right. Well, I'd tell you what, Dan Duncan, our late Co-Founder and Chairman, believed the way we do business is important as the business that we do. And that's the theme for our Analyst Days this year. Our first day will focus more on ESG-type matters. And if you would, that's the way we do business. And then -- and we'll try to reflect how we come in and how we develop that philosophy and implement that philosophy throughout our business in our organization. Tomorrow, we'll do our regular fundamental -- business fundamentals update, our commercial updates, financial updates, capital project updates. And if you would, that's the business that we do. So today, we're going to keep things at a pretty high level. And we've got several subject-matter experts that will come in and get deeper into the conversation. But with that, I think we can go ahead and kick off.

Yes. So we always have a theme on every Analyst Day. I like this theme. I like playing off of something Dan said. The other thing he said is his grandmother, as I remember, told him, "Always just do the best you can every day." And I think that's part of the DNA in Enterprise. We'll talk about it a little bit more. The other thing I like about this Analyst Day is you and I have minor parts.

Yes, we do.

So there are -- you're going to see what our bench and our people and our leadership. You're going to see how good they are, and I'm looking forward to seeing them.

We thought that the best place to start is what sustainability means at Enterprise. And sustainability has been a part of our thought process in the way we built the company, going all the way back to our private days in the beginning in 1968. But in 1968, we wouldn't call it sustainability, it was called building a durable business for the long term. And really, that comes in and starts with our people. And we've come in, and this slide shows many of our core values. It will come in and really it sort of represents the fabric of our culture and the foundation of what we call the EPD model. And that EPD model, we come in and we have weekly messages that sort of reinforce the various attributes of our business philosophy and personal conduct. And then we also have a leadership series that also comes in and helps develop our next level of management to come in, and again, consistent with these -- with this business philosophy. And one thing that Dan would say often is our most important asset are our employees. And we work hard to invest in our employees. And there's a couple of statistics that I'd like to share with you as far as growing our own management team. Over 80% of our vice presidents and above started at a lower level position at Enterprise. In fact, if you go back down and go one level below Vice President to a Director level, 90% of our Directors and above started at a lower position with Enterprise. And then when you come in and you think about longevity, 20% of our workforce has over 15 years of service with Enterprise. So we think we have good continuity in our practices and our value system.

Damn, that was pretty good, Randy? You prepared for this.

Yes, a little bit.

I think another thing that's important at Enterprise, when you are -- we've had a pretty darn good ride over -- what have we been here together, 20 years? 21 now, I guess, and we've been pretty successful. We've -- you will hear throughout this. I mean, we started, Randy -- when we went public, what was our Enterprise value?

$1.2 billion.

What is it today?

Probably between $75 billion and $80 billion.

So -- but when you have a run like that, it's easy to get a little cocky, and one of the things we preach to our people is, "First of all, you got to have integrity, but also stay humble." Dan Duncan -- and you're going to hear a lot about Dan Dunkin from us because that's what's in our DNA. But Dan Duncan was one of the most humble people I've ever known, notwithstanding his success and his wealth.

He was driven like...

Well, we can talk about that, too. That's in our culture, too, and I think that's only here: creative and innovative and driven. So I've been at companies where you had a little downtime periodically. Do we have downtime around here?

No, we don't.

Man, our short-tail never hits our rear end. But that's part of the culture and the part of the the way we do business. There's one other thing on this slide that I think is important. It says building long-term relationships through win-win, win-win transactions. What does that mean? We really believe that our commercial people need to be out visiting their customers, building relationships. But you keep hearing this thing, win-win; basically, I don't believe in that. I don't believe that you can have a deal where each party has exactly the same benefit. So we put in here that it's capital W and a little w or it's a little w and a capital W. And in many cases, a little w is pretty darn good. Because if you take the little w, it leads to more business. Does that make sense, Randy?

Yes, it does.

I mean, one time, I did a deal, and I thought it was the greatest deal in the world. And Dan got upset because he said, "You took too much, Jim." And I couldn't believe that. I said, "No, got it." I thought I was here to make money. He said, "You are, but I want it for the long term."

Always wanted that next transaction.

Yes. It's the domino effect, and that's kind of how we work here.

One of the other things that we have, from an organization standpoint, is a commitment to respect and to the safety of our employees, our customers, the communities where our assets are and also to the environment. And you will hear some of that in the theme throughout the day, especially later on, whether it's with Chris Nelly or with Graham Bacon and talking a little bit about our landowner relations and how we develop a project, but that's a strong commitment to us. In addition to how we -- when we think about how we support our communities, in addition to the $400 million in property taxes that we pay every year, we've also invested over another $100 million in local communities to help support first responders to help come in and support education efforts as well. And one of the example of that is when at our facilities, across our system, we keep personal protective equipment, and we keep a pretty good inventory. And when COVID struck, and in the early stages last spring, when the medical community and first responders just did not have enough PP&E to go around, whether it was the masks or the gloves, we came in and gave some of our surplus PP&E to local hospitals to help them make it through those lean times. And really, one other thing I want to hit on is Enterprise being an energy infrastructure, we were deemed to be an essential industry. And I'll tell you what, our employees really have shined through this whole period. We went through probably there a couple of months where we were operating skeleton crews in our offices here in Houston. In the field, we were operating 7 on, 7 off, and then we migrated back. And I have to say, in Houston, or at least what we see in downtown Houston, we are one of the few companies that are back. I want to say, we came significantly all of our employees were back starting, say, in August of last summer. And hats off to them because they've really delivered through a very challenging year. And with the coronavirus, we've had masks. We've had social distancing and meeting rooms at 50% of capacity, but our employees have been disciplined throughout this, both here at the office because we've not had any outbreaks here, knock on wood. And we've been very fortunate in that regard, but they've also been doing it at home, too. So again, we think our employees have really shined through this pandemic.

Yes. But we've had everybody back in the office. And I guess Chris Nelly is going to hit on it tomorrow. But 2020, what were we, Randy, 98% of what we did in 2019?

Right, from a cash flow per unit standpoint.

Okay. So we go through a pandemic, I've never seen demand fall off like it did, and we still come close to a record year in results. And another thing that's on this slide is we don't take shortcuts. Our people, we're not going to take a shortcut. We're going to do things the right way, and I think that's what happened in 2020. We're going to carry it forward in 2021.

The last thing before we leave this slide, I think another way that we measure sustainability is 22 consecutive years of distribution growth. And I don't think there's too many midstream energy companies that can say that.

What is it when we have -- if we have 3 more, what -- we are in some kind of category that.

We'll be in that rare era. I think there are only 30 companies, 40 companies, may be called the Dividend Aristocrats. Where it's 25 consecutive years of dividend or distribution growth. So we are 3 to go. And in fact, coming into this year, we've already increased our distribution. So 2021 could actually come in and be the 23rd year of distribution growth. Really, we thought with this next slide, we would come in and talk about global energy expectations. And Tony is going to come in and get into some of the fundamentals around this a little bit more, but we thought we would come in and probably this is a good place to talk about how we view Enterprise's role as we currently see it, as far as with the world going through a continuing evolution in energy. And really, we see our role in 3 areas, one, we are seeing more countries joining the Paris Agreement, whose goal is to come in and lower greenhouse gas emissions and -- but then the other goal of the Paris Agreement is to come in and eradicate poverty throughout the world. And one of the keys to this is providing lower emission energy sources to a lot of these folks. And I'll go back to more of that here in a minute. The other is, we come in and we look to how can we come in and economically reduce our emissions and our emissions intensity, so what are our emissions for every barrel of oil equivalent that we handle. And Graham will speak to this a little bit later, but we have done probably $28 billion of organic growth in the last decade, $8 billion of acquisitions, so we have really added to our footprint during that time period. And during that time period, we've been able to come in and reduce our energy, our emissions per barrel of oil equivalent by about 19%. And Graham will speak to that a little bit later. And then the last area that we're looking at is to come in and -- one of our largest sector of customers is the petrochemical industry. And the last thing we've done and really the most recent thing that we've done is to come in and joining their efforts to come in and help reclaim and recycle plastic waste and by joining this coalition to -- on an alliance to end plastic waste. And Chris Nelly will speak to that here in a little bit. When we come in and we think about the eradication of poverty, there's 8 billion people in this world and half of those people arrived in the last 45 years. And unfortunately, when we come in and look, 3 billion of those people live in global energy poverty. Now that's almost 40% of the world's population, and what do we mean by global energy poverty? You've got people that come in, and when you think about their home cooking it is with uses of coal or charcoal or wood, which is called biomass, and in some situations, even animal waste, is what they use for their home cooking. And with that, the World Health Organization comes in and estimates that you have almost 3 million people...

3 billion, Randy. 3 billion.

3 billion and -- that are forgotten and live in energy poverty. And with that, that -- what happens in that energy poverty and the dirty sources of fuel there, it leads to in-home pollution. And the estimate is there's almost 4 million people that die each year from in-home pollution. And when you think about it, that's more than AIDS, more than a lot of major diseases of people dying in their homes from in-home pollution. And most of this is in countries, well, where you're seeing the population growth, whether it's in Asia or sub-Saharan Africa. And there's some great success stories here. When you come in and you look at both China and India, and this is going back to UN data, back to -- from 1990 to 2018. Both of those countries have had over a 50% increase in what they call their human development index. And whether that comes in to per capita income, whether it comes into life expectancy, whether it comes into education, but they've been proving. And the one thing that struck me the most is the life expectancy in India, I believe it was, is up over 10 years longer over that time period. China, up almost 7.5 years longer. And the difference between 1990 and 2018 was energy consumption per capita. That's what lifts these developing countries up and out of poverty and have a better quality of life. And so India has had a program called Ujjwala. And since, I think about 2016, they've had 200 million households come in and get off this coal and wood and animal waste onto LPG. And the thing about it is that 200 million, huge number, that's still only 50% market penetration. And sadly, where the World Health Organization is, is they believe even at 2030, we're still going to have like 2.5 billion people still living in energy poverty because even as quickly as we're coming in and penetrating with LPG as clean sources of cooking, you've got global population growth of 1 billion people every 11 or 12 years, it's hard to catch up with that population growth. So we continue to see this energy poverty being in Asia and also sub-Saharan Africa is probably one of the next places. So the UN has developed a nonprofit. It's a public-private organization called the Global LPG Partnership, and with LPG, propane and butane, and what it's trying to do is really, in these countries, where you have the energy poverty to come in and develop and finance and actually implement getting LPG into some of these areas.

Damn, you're doing good.

It's an easy story to tell.

Yes, it is. If you've never been to India, the poverty there is just unbelievable. And I told the guys before the pandemic -- we had somebody in Asia damned there every week. And one of the things that I told the guys is, "Maybe we -- when we get back to traveling, we probably ought to spend more time in India than we have." Because if you -- as we went through this pandemic, our LPG exports never slowed down. I mean, we've been full the entire year, and I think a lot of it is because of that new demand. Because once you get off of burning animal waste and get on to LPG but then you get to the point of trying to define what is energy poverty. So okay, I've got LPG and the quality of my life has improved, but still there's got to be industry developed. Energy poverty is not just having a light bulb in and that doesn't solve it. So I have -- I think a lot of you guys know, we have a home in Thailand. So my weekend home is 24 hours away. But whenever I'm over there, what I see is, I see people on bicycles and they want motorcycles. Then obviously a whole family: mother, father, 2 children on a motorcycle, they want a car. So all of these people that we talk about, they want what we have. And ultimately, I think they're going to get it, and that's new demand. If I look on this chart, and we keep talking about -- I got grandchildren, Randy, that think that there's going to be no more fossil fuels in 5 years. There's going to be fossil fuels. If you look -- and I think Tony is going to go through this. In 2040, you're still using more oil than we are today. But the other thing, if you look down on that bottom right, 60% of oil demand growth in the future will be in petrochemicals. It's not hard to figure out why we like primary petrochemicals.

Well, and Jim, that's why I have come back in just some of the research that we do into this is, I think much of the world does not have an appreciation that products that come from natural gas, crude oil and natural gas liquids. That is the foundation for modern civilization. In a couple of places where, again, I don't think you think about these products being in our everyday lives is, as you come in, and I picked up a quote out of the American Journal of Public Health, and basically, the statement is: "Plastics are central to the antiseptic model of modern health care." So when you go into a surgical room, which I try to stay out of, but you come in and you see all the medical devices there, you see the IV bags, you see the syringes, you see the tubes, you see the PPE, it's everywhere. And not only is it there but when you come in and substantially all pharmaceuticals have organic chemicals in them, whether they are excipients or whether they are come in as, actually, active ingredients. They are pervasive pharmaceuticals and our manufactured goods. I want to say the estimate is 96% of all manufactured goods contain plastic. A lot of them are in our automobiles now, planes. I mean, you just go on and on and on, whether it's the carpet fibers or the plastic bottles or the cushions that we're sitting on. I mean, it's everywhere. And -- but even when you come in and you look at our iPhones and computers, although semiconductor chips in there have what they call electronic chemicals that are in there to come in and to go into the manufacturing of the chips. So again, we're going to have oil and gas and natural gas liquids in this world. I don't think we could live without it.

Well, you can't live without it. If you think about it, and I think it's on a slide, we're going to have tomorrow. But all the products we handle go into goods that make modern life possible. I mean, it just kind of sums it up. And I was with -- last night, I was with a CEO of a big petrochemical company. And right now, our polymer-grade propylene is at -- I've never seen a price like this. It's -- and I ask him, I said, and he produces polypropylene, I said, "How are things going with the price of PGP that's high as it is?" He said, Jim, "I want to build inventory. I can't build inventory, I've got such demand." He said, "We're selling this stuff." So plastics are here, and they're not going anywhere. I read -- there's an article in the Chronicle today, and it said that over the next 10 years, petrochemical demand is going to grow by 60%. So Randy, we've got to expand what we're doing in primary petrochemicals.

The last slide for Jim and I, before we turn it over to our -- the rest of the team, is really coming in and talk about sustainable alignment. And Chris Nelly is going to get into governance more as we will have. But here, we talk about how proper alignment, and I like to say, when you come in and look at how we set our incentive comp or the ownership of the company. We, sort of, eat our own cooking. And if you would, I don't know of any better way to assure solid long-term governance than to come in and be invested alongside your investors. When we come in and look at how we think about incentive compensation, break it into 2 areas: one, on the financial considerations, we come in, and this is cash flow from operations per unit, distributable cash flow per unit, gross operating margin, return on invested capital, 3- and 5-year equity total return versus our MLP and C-corp peers. And when we come in, we think those -- there's not a formula to that, but we come in and consider all that. And probably, if we come in and look at the most important items on there, it would really be the cash flow per unit, the return on invested capital because that's not only -- it takes into consideration not only the cash flow but also how much we invested to get to that, and then also our total return versus our peers. And in our mind, that provides a mosaic of our financial performance. Now the other things that we've added more recently, and some as recently as 2019, are operational considerations. And there, that's when we come in and pick up our emissions intensity. We pick up some of our safety statistics on total recordable injury rate. And so those are other elements that we come back in and pick up when we think about incentive comp.

Okay. Randy, from a -- if you look at the right side of that slide and for you folks, I think it's important the commitment to enterprise unitholder alignment. And if I look at that circle, 32% of the units are owned by affiliates or our general partner or by management. And you couldn't have -- when I think the general partner, what are they -- I mean, we're as minority. Part of that 32% is basically the general partner. That's alignment with the common unitholders. The other thing is, we have a requirement that our executives have to own 3x their annual salary. We guarantee you, they own more than that? I know I do. And then our Non-Management Directors on the Board, they have to -- they are required to own 3x of their annual retainer. And I see -- we're constantly getting a request that they want to buy more units. So I bet you, they are way above that. We got to check that out. But I don't think you could have better alignment because we're driven to bring value to these units because we own them. I mean, my kids are probably going to live off those distributions when I'm gone. So I don't think anybody could have a more supportive general partner than we did, and they step up to the plate all the time for us.

Consistently. And I think Chris Nelly will have some slides on that later about just over time how the general partner has continued to come in and support our growth by buying additional units. The other thing I'd point out is these guidelines -- these guidelines didn't get put in place when ESG became trendy. I mean, we've been doing this, going back really once we came in and merged our affiliated partnerships altogether in 2011, we put these guidelines in place at that point in time. So we've been doing this for a while.

So it's kind of like that Barbara -- remember that Barbara Mandrell Song. It was country when country wasn't cool. Well, I guess what you're saying is, "We were ESG when ESG wouldn't cool."

We just didn't know that's what they called it. Well, looking at the rest of today's agenda, Tony Chovanec will follow us really looking at ESG fundamentals. Tomorrow, he'll come in and look at more business fundamentals. Chris Nelly will come in and take a look at sustainability, our oversight. He'll speak a little bit on that lines of plastic waste. Graham Bacon and his team will come in and talk about how we think about sustainable operations. Bob Sanders and Yvette will come in and talk about asset optimization. Paul Flynn will come in and -- Paul is our -- in our information technology and our Chief Information Officer. He'll come in and talk about cybersecurity. And then Hap and Lindsey Miller will finalize things, talking about our government affairs and efforts in industry associations. Thank you, and now we'll turn it over to Tony Chovanec.

Thank you, Jim and Randy, and now we'll turn our presentation over to Tony Chovanec to discuss ESG fundamentals.

Good morning, and welcome to the fundamentals portion of our ES&G presentation. Today, we'll look at future global demand trends, the important role the U.S. oil and gas plays in global markets, including the environmental benefits. We'll also talk about the trends we see in other renewables, including hydrogen, and we'll finish up with a petchem outlook. Tomorrow, we'll cover more traditional fundamentals, including our production forecast. It's no surprise that the largest variables driving global outlook for energy, over the next 20 to 30 years, are going to be population growth and a growing middle class. In fact, the earths population is expected to grow from 8 billion people today to almost 10 billion in 2050. And almost all this growth will happen in non-OECD countries, specifically in Asia and Africa. At the same time, more and more people are expected to move into larger cities, drawn by higher standards of living and opportunity. These trends will come with significant increases in demand for energy. In fact, it's projected that non OECD countries will consume 70% of the world's energy by 2040. The pitfall here is that today, poor nations produce 3x the amount of CO2 per unit of GDP of advanced nations. Clearly, this trend cannot continue as energy demand grows. Bottom line is, we all want people to prosper and to be healthier, but this creates a sort of a dilemma. Today, 3 billion people don't have access to clean cooking, and we're going to be adding another 2 billion people, mostly in these poor nations over the next 30 years. There's an urgency for getting non-OECD nations off of wood and coal. But at the same time, they can't afford a power grid, a natural gas distribution network, solar systems, much less a Tesla. But we know that they can afford canisters of LPG, oil products at these lower prices and electricity often generated by state sponsored LNG. This next slide to me is one of the most telling pieces of information in the deck. It outlines what I call the electrification challenge. We look at population growth and demand growth on the prior slide, now let's look at where the CO2 actually comes from. 65% of global emissions already come from non-OECD countries. More importantly, coal makes up 50% of non-OECD emissions where it's mainly used for power generation. But with the growth in population, urban living, appliances and air conditioning, electricity is going to be the fastest-growing sector over the next 30 years. So job 1 has to be to significantly reduce coal and solid fuels consumption in order to achieve the goal of reducing carbon emissions. In a minute, we'll look at how U.S. LPG and natural gas are already playing an important role in this global battle. Did you know that China has 185 coal plants under construction, plus another 270 currently planned. And yes, for the record, they have signed the Paris Climate agreement. John Carey, President Biden's climate czar acknowledged earlier this month that almost 90% of all the planet's global emissions come from outside of U.S. borders. So I guess the real question becomes, how do we expect poor nations to go directly from coal and solids to renewables when these new technologies are not affordable and not readily available at scale. If poor nations are going to advance while reducing their emissions, their real answer for meeting their growing energy needs, is all of the above. If not, there are likely to be some very serious unintended consequences. This next slide summarizes the IEA 2020 World Energy Outlook for energy consumption comparing 2019 to 2040. Cutting to the chase, global demand for energy is expected to grow by 20% over the next 20 years. In fact, in their base case, IEA predicts that demand for everything except coal increases over this time period. Again, this confirms the all-of-the-above message we just covered. Similar to what we discussed in the previous 2 slides, some of the important trends are worth noting. First, GDP per person in non-OECD nations is projected to triple from 2018 to 2050. Also, 88% of the next 1 billion entrants into the middle class will be in Asia. Most energy-intensive manufacturing is expected to shift to Asia, increasingly to India. And 60% of future oil demand growth will be driven by petrochemicals rather than transportation. Next, let's discuss oil demand. Because many of our fundamental supply slides have a lot of details, we always try to present them with graphs and pictures. But admittedly, every year, there's one slide that I can't present as a picture. This is that slide. In order to not lose today's message in the detail, I want to just come out and say it: "Yes, oil and gas have many contenders that will slow demand growth, but most will take years to make a meaningful impact." Meanwhile, the need for energy continues to grow in virtually all the world's poor nations. Assuming we're going to be able to substantially meet the world's growing energy needs with new products, many of which are in the prototype and development stages, to me, it is little like assuming we're going to be able to not just catch but stop an accelerating freight train. First category on the slide is cars and light trucks. They make up about 1/3 of oil demand. In that space, electric vehicles are coming of age. Their costs are dropping and some governments are heavily subsidizing their sales. In fact, last year, electric cars made up around 4% of all new cars in the U.S., Europe and China. And projections are for much higher numbers by 2030. However, really taking this evolution to the next level raises some very hard questions. First, how fast can electric vehicles penetrate non-OECD markets where populations are rising rapidly and where they don't have money for subsidies. On top of that, how much of that electricity can be sourced from renewables or clean generation and how fast can electric infrastructure be built and who pays for all this in poor nations. Last but not least, most economists estimate that even if we have sales of electric cars that approach as much as 50%, demand for oil will still grow because of the sheer number of new drivers. The age of the fleet, strength of SUV sales in certain markets like the United States and growth in demand for trucks, heavy industrial equipment and aviation. You will note that hydrogen is mentioned several times on this page. It's a possible substitute for oil and gas. Relative to the energy evolution, there's a lot of assumptions being made about hydrogen, and how it's used in many applications including being used in all types of transportation and displacing coal and gas in home and industrial heating. Indeed, a lot of eyes are on hydrogen. It's a simple molecule, with essentially 0 emissions. But the reality is, there's a lot of time, a lot of attention and a lot of money that needs to be spent in order for hydrogen to find its best fit in the world's energy picture. Next on the list is plastics and chemicals. We have mentioned on a previous slide that according to IEA, oil demand in this sector accounts for 60% of future growth. It's impossible to live without plastics. They are everywhere and they enable our modern lifestyle. The alternative to plastics are recycling, which we need to do more of. Going back to paper, glass and metal. Take it for me, we're not going to do that. And I guess, bioplastics, where our admittedly rudimentary calculations show that 1 billion pounds of ethylene takes 1 million acres. So a role for some of these in the future? Absolutely. Replacement? No way. On this next slide, we compare coal to other forms of hydrocarbons. This is not a new slide for us, so I'm not going to spend a lot of time on it. Just remember that there's a big difference when comparing coal to natural gas and propane. It's not hard to see why propane demand has grown so rapidly. In addition to being clean, propane is easy to transport. It's also not hard to see why the world is now consuming 48 Bcf a day of LNG, 11 Bcf of which comes out of the United States. Later, we're also going to look at some of the qualities of our light shale oil that, more often than not, go unnoticed. But taking a deeper dive into LPG, we discussed earlier that there are 3 billion people lacking access to clean fuels. An estimated 4 million people each year die of indoor pollution, many of which are under 5 years old. With that in mind, let's take a closer look at the environmental benefits of the current U.S. LPG export. The U.S. exported 1.6 million barrels a day of LPG, mostly propane in 2020. If we assume that 70% of those barrels displace coal and solids for heat, 50 million metric tons of CO2 were avoided. That's the equivalent to eliminating the emissions from 10.5 million cars each year or saving 32 million trees. Similarly, enterprise exported LPG, avoiding 20 million metric tons of CO2, equivalent to emissions from 4.3 million cars and saving 13 million trees. On this next slide, we're going to compare light shale oil. Specifically, we're going to compare the sulfur in a barrel of West Texas light to the sulfur in a barrel of something like an air medium or Mars barrel. In 2017, about a year after the export ban was lifted, we were exporting 500,000 barrels a day of crude, and we said at our analyst meeting that we thought we'd be exporting 4 million barrels by 2022. Frankly, people had a hard time comprehending those numbers. At that meeting, we made the case that we definitely would have the barrels and that the world would want those barrels because our barrels were light and sweet. Meaning they're easy to refine and easy to blend. I think everyone understood the light logic, but maybe not the importance of our barrels lack of sulfur. On this slide, we compare air medium WTL. An air medium barrel has 200x of sulfur that a barrel of WTL has. So what happens to sulfur and oil? While it either comes out as a waste product in refineries; you see that picture there with the sulfur. And if you don't clean it up and you burn it, it becomes sulfur dioxide and the world has to deal with it as smog and acid rain. Sticking with crude on this next slide. In addition to its low-sulfur qualities and its clear color, our shale oil oftentimes has something else going forward. Much of it is also high in paraffin, which makes it an excellent choice for the naphtha crackers in integrated refining and petchem complexes around the world. While many of the refineries in the U.S. were built to handle the world's heaviest and dirtiest crudes, there's a new integrated petchem and refining story developing around the world, and it has a growing appetite for our light-sweet-shale crudes. On this next slide, we look at something that enterprise doesn't export directly but something that plays a very big role in our value chain, LNG. Remember from a previous slide that natural gas CO2 emissions are the lowest of the hydrocarbons. Like LPG and crude oil, the U.S. has rapidly become an important player in global LNG markets, where it's mostly used for power generation. The emission comparisons are stunning. I'm happy to say that the U.S. has plenty of natural gas and we will for decades. It's the easiest molecule to come out of these tight rocks that we call shales. And if the world wants more, we have more. On this next slide, we're going to take a look at some petrochemical fundamentals. The title on the slide says petrochemicals are essential for modern everyday life. That's probably an understatement. As you know that 96% of all manufactured goods are directly touched by petrochemicals and that 99% of the pharmaceutical feedstocks and reagents are derived from petrochemicals. Also, did you know that plastics make up 50% of the volume of new cars, but only 10% of the weight. Everything that we're touching here today has a petrochemical base, including the camera that's recording us and the devices you're watching this on. Plastics and petrochemicals play a huge role and a growing role in the lives of every one of us. These products are going to be key for poor nations to continue to develop. We've been talking about this next topic for a while, but ethylene and propylene demand continue to steadily grow. Demand for petrochemicals is expected to stay strong, meaning stronger than global GDPs and certainly much stronger than what's expected for crude oil demand. The other thing we've done on this slide is show the long-term petrochemical oil consumption numbers from the IEA. Remember that these numbers include NGLs. Currently at some 11 million barrels a day, the IEA projects that demand will move up 3 million barrels a day by 2030 and up another 1.5 million by 2040. We're also showing alternative cases that the IEA is presenting around much stronger recycling at least out to 2030. The bottom line remains the same in all these cases. Expect much more oil to go into the petchem sector. On this next slide, I want to take a minute to talk about the alternatives to plastics, or lack thereof. Jim indicated that we joined in our strong support of the alliance to eliminate plastic waste. Recycling and proper disposal is absolutely key to the growth in petrochemicals. The point of this slide is to emphasize the benefits of plastic compared to what we use before we had plastics. I'm happy to admit it, I think, but I remember when we use glass for all of our consumables and the butcher wrapped our meat in paper that did not freeze well. Take it from me, I'm confident we aren't going back there. That said, clearly, humans must do a much better job with plastic waste because the use of these products is going to continue to grow. In a minute, Chris Nelly is going to talk more about our involvement in the global effort to end plastic waste. Finally, today, I want to take a minute and talk about hydrogen. I have to admit. I don't think I've ever seen anything get as much attention as hydrogen has in just the last year. On the surface, it's clear why. When you convert it into energy, the byproduct is water. In addition to our space program, the primary applications for hydrogen today are in refining and petchems. But governments around the world, especially in Europe, are subsidizing studies and many pilot projects to use more hydrogen because of its clean attributes, especially when produced from renewable power. Hydrogen certainly has some exciting long-term prospects. And in time, we believe several applications will be developed economically and at scale. The other thing I'll cover on this slide is that hydrogen already plays a very large role in enterprise products petchem sector. In fact, when PDH2 is completed, we will hand at 100 million cubic feet a day of hydrogen. That's equivalent to a world-scale plant. We understand how to burn it, how to move a lot of it around and we know how to store it. We have no doubt that our integrated platform, our plants, our pipelines and our salt dome storage, will be key value-add for this unique molecule. I think that concludes my prepared comments on ES&G fundamentals for today. In summary, we fully expect to provide more and more midstream services for products like hydrogen, renewable natural gas, low or no carbon refined products and other alternative products as they are developed at scale. You're on this call because you want to better understand all this fits into Enterprise's future. With our integrated energy platform and our value chain, we're highly confident that the answer is extremely well.

Next up, we have Chris Nelly, who will discuss sustainability, oversight and initiative.

Earlier, Jim and Randy's set the tone for today's presentations with a quote from our founder: "The way we do business is as important as the business that we do." In keeping with that theme, I want to use the time this morning to go over the pillars of our sustainability efforts. Sustainable operations, our people and our communities, the durability and the profitability of our business, these make up the foundation of our sustainability philosophy. There's quite a bit of data on this slide, and no, I don't plan on reading off all of these points. Instead, I would like to give you an overview of our sustainability pillars. And then throughout the day, you will hear from other leaders at Enterprise who will dive deeper into each of these areas. Within sustainable operations, we focus on employee safety, minimizing recordable and lost time incident rates, reducing emissions. In fact, we've seen a 19% improvement in direct reportable CO2 emissions intensity since 2011. We are also focused on our use of renewable power. We recently executed a contract to purchase 100 megawatts of solar power as part of our 25x25 initiative. This initiative is where we look to increase our renewable power consumption to 25% by the year 2025. And finally, hydrogen. Aside from COVID and pandemic, hydrogen was the word we've heard most from investors over the past year. We received a lot of questions around our role and ability to move hydrogen. Enterprise is already the largest midstream producer of hydrogen through our IBDH and PDH processes. We utilize hydrogen from our facilities at various points in our operations, including as a substitute for natural gas. We have a track record of being able to adapt to changing market conditions and repurposing our assets accordingly. So if and when the market for hydrogen becomes more economical and scalable, our infrastructure is well positioned to capitalize on these opportunities. Our people and our communities. Earlier this morning, Jim and Randy spoke about the importance of our employees. I would like to cover the second part of this pillar, communities. Enterprise focuses on supporting the economic development, youth educational programs and emergency responders in the areas in which we live and work. Since 2015, Enterprise has contributed over $130 million in community development efforts, some of that comes through the matching of employee charitable contributions. Also, through the support of the Dan L Duncan Foundation, where dependence of qualifying employees are eligible to receive scholarships to further their education. So far, there have been 88 recipients of the Dunkin scholarship from diverse backgrounds across the 26 states in which we operate. The durability and profitability of our business focuses on how sustainability is embraced across all areas of the company. Tomorrow, I will cover profitability. So today, I will focus on the durability aspect. Our sustainability policies are set by the office of the Chairman and governed by our Board of Directors through the Governance Committee. At Enterprise, we do things differently. No one department is responsible for sustainability, rather we manage these efforts throughout our organization. Human resources, government affairs, EHS&T and commercial and operations are just a few of the 12 groups in Enterprise that are responsible for executing our sustainability strategy. These groups collaborate on an ongoing basis and gather weekly to review progress at our Safety Leadership Council meetings. Our Investor Relations team is then responsible for coordinating across these 12 groups and reporting our ESG efforts. Our 11-member Board of Directors is chaired by Randa Duncan Williams. In 2020, Enterprise was ranked 101st on the Fortune 500 list. Then in looking at the top 100 companies on that list, only 9 other companies were led by a female chair. Our Directors are highly qualified, engaged and the majority of which are outside Directors with a broad array of expertise. Our governance committee, which is 2/3 independent, provides oversight of management's establishment and administration of all ESG-related matters. The independent directors of the Governance Committee comprise the incentive plan administration subcommittee. The IPA subcommittee reviews and improves all aspects of the compensation of our co-CEOs based upon the company's performance of financial, safety and emission metrics. The subcommittee also reviews and approves all grants of equity made to employees through our long-term incentive plan. Our Audit and Conflicts Committee is comprised entirely of outside Directors and oversees the integrity of the financial statements in our compliance with legal and regulatory matters. Additionally, the Audit Committee has established and oversees our independent confidential hotline as a method for interesting parties, including external stakeholders, to communicate with non-management Directors. As a partnership, we believe that it's necessary to have strong alignment with our common equity holders. Together, our general partner and management own approximately 32% of our common units. And since our IPO in 1998, our general partner has continually reinvested over $2 billion back into our units. And then only 4 years after going public, RGP recognized the long-term financial burden of incentive distribution rights. They eliminated the 50% split in 2002, and and then in 2010, completely eliminated all IDRs. Additionally, our GP waived $320 million of distributions over a 4-year period beginning in 2011, as we simplified our organizational structure. That is alignment. Our commitment to maintaining a healthy balance sheet and preserving financial flexibility is well known and evident in our BBB+ equivalent ratings across the 3 credit agencies. Sustainability has always been at the core of Enterprise's philosophy since our inception in 1968. However, we only started reporting on these topics 3 years ago. Over that time, we have made progress towards improving our ESG disclosures and our ESG ratings. Institutional Investor's most recent survey of sell-side analysts recognized Enterprise as having the best corporate governance, best ESG metrics and best in crisis management amid COVID-19. While we are grateful for this recognition, we still have more work ahead of us. We continue to expand our ESG disclosures and recently collaborated with the Energy Infrastructure Council in developing a new ESG reporting template for the midstream industry. We understand how important it is to have comparable metrics across the space, and we would like to thank the investment community for their collaboration. We also recently executed an agreement with Sustainalytics to begin comprehensive coverage later this year. We hope this interaction with Sustainalytics, along with our disclosures, will improve our future ESG ratings. Finally, I would like to spend some time discussing recycling. We have a comprehensive recycling program in enterprise. In 2019, we recycled more than 6 tons of plastic waste, 88 tons of paper, nearly 2 tons of aluminum, 66 tons of cardboard. We also recognize our place in the global environment when it comes to recycling. As Tony detailed, plastics are essential to modern development with few viable replacements. However, many of these goods end up creating unnecessary waste. According to the World Economic Forum, 90% of the plastics, polluting our oceans comes from just 10 rivers in highly populated areas lacking proper waste handling. At Enterprise, we acknowledge the importance of responsible consumption and production, and we sought to become part of the solution. This past December, Enterprise became the first midstream company to join the alliance to end plastic waste. And as its name suggests, the alliance to end plastic waste is an international community of companies from across the plastic value chain who are dedicated to the goal of ending plastic waste. Sometimes pictures really are the best way to tell a story. So in a moment, I'll play a quick video to highlight some of the work from the alliance. If any of you feel as strongly as we do about this issue, the alliance has created a category for companies outside of the plastics industry. Simply go to endplasticwaste.org or reach out to our Investor Relations group, and we can help you get you connected. Thank you and enjoy the video. [Presentation]

Next up, we have our panel to discuss sustainable operations hosted by Graham Bacon.

Good morning. My name is Graham Bacon, Executive Vice President and Chief Operating Officer at Enterprise. This morning, I'd like to introduce you to a number of members of our leadership team, a leadership team that's very collaborative and works as an integral team and is part of the true part of the success for Enterprise. On my left is Angie Murray, Senior Vice President of technical services; and next to her, Kevin Ramsey, Senior Vice President of Capital Projects; followed by Ivan Zirbes, Vice President of Environmental Safety and Training; and then finally, Phu Phan, Vice President of Western Operations, who represents our operations group and 1 of our 3 major regional operating groups. This is a leadership team that collaborates every day on managing all aspects of our asset life cycle. At Enterprise, we had a tremendous year last year, whether it be on project execution, safety performance or cost reduction. And all of that performance is due to the outstanding performance, drive an initiative of our employees throughout all of the organization. But it really starts with safety first. And Ivan, why don't you tell us a little bit about Enterprise's safety performance in 2020 and the governance that we use to drive that safety performance.

I'm very pleased to report that we had a 40% year-over-year improvement on our injury rates and the 2020 was our second best year ever for safety performance. We ended 2020 with a total recordable injury rate of 0.48, which compares very favorably to industry averages of 0.91. Achieving outstanding safety performance is a result of many factors. However, today, I'd like to emphasize our strong system of governance. Starting at the top with the governance committee of the Board of Directors, at this quarterly meeting, the governance committee receives updates of safety performance, any significant incidents that have occurred and briefings on any emerging safety issues. Next, you have the Leadership Safety Council. This group includes the Chair of the Board of Directors, the co-CEOs and senior leadership from operations and commercial. This group meets every single week to review safety performance and incidents, any issues regarding safety policy and procedure and have overall discussions regarding the direction of the safety culture and programs. Next, you have our Safety Management Advisory Team. That's really the group you have in front of you today. This group focuses on opportunities for improvement across all of EHS. This is where detailed decisions regarding safety procedures and policies are made. Then it goes down to our regional steering teams. This is regional level management, and now we're at the level where implementation of the safety program is becoming the focus. Finally, there are the safety committees. This is the frontline personnel executing the safety program where the work happens. This system includes smooth transfer of information up and down the system. And when you add this all together, you get a comprehensive system of safety governance that directly leads to the safety performance we saw in 2020.

You'll now hear us talk a little bit about our Enterprise we design, build and operate our assets. At Enterprise, teamwork is essential. And a great example of that is at the outset of a project is the collaboration between our capital projects groups and our environmental groups. And we'll walk you through a recent example we've had on the SPOT project. And Kevin and I, that I'd like to speak to you about some of the collaboration that goes on when we're starting off a project, particularly one as complex as the SPOT project.

Okay, absolutely. SPOT projects is a great example of how we do this. On the pipeline portion of this project, much like all the pipeline projects we do, we're obviously looking for the shortest route possible. But we're looking for the shortest route that is either paralleling an existing pipeline or is inside an existing utility corridor. That approach gives us the least impact to the landowners that we're going to cross as well as the environment impact. Once we've tune the route up to that level of detail, Ivan's folks take a number of other factors to look at.

That's right, Kevin. We're going to go through efforts to identify any threatened or endangered species or any significant cultural sites, prehistoric sites or historic sites. And really, the theme the entire way is minimization of impact. So we're going to push that information back and work with projects on further revising that route. Really, probably the biggest example on the SPOT project would be the Brazoria National Wildlife area. So that's something that we had to work pretty extensively to make sure we routed around and avoided impacting that area.

Right. It's often a very iterative process between the 2 groups. Anytime Ivan's group finds an environmentally sensitive area, we have to kind of step back and look at the different construction methods available to see if we can cross it. Most of the time, we wind up doing a reroute. So once a constructible reroute is established, then it's back to Ivan's folks again to take yet another look.

Yes, this process is going to go back and forth and it's going to be continually fine-tuning. Even when we're out in the field doing surveys, we're going to identify additional issues and work -- that we're going to work projects on. And then all the way when we're in construction, we might identify further issues that we have to adapt around.

Yes, Kevin, one of the most interesting things about the SPOT project is how we came up with a location of the Oyster Creek Terminal. Tell us a little bit about that?

You bet. So we're -- it's large terminals. So we're looking for a location that has good access, that is close to power and it's not near to neighborhoods and businesses. And we were able to find a location that was immediately adjacent to an existing landfill on one side; and on the other side, was adjacent to a power line corridor that we had routed our pipeline down. So it's really an ideal location.

And even further to that, Ivan, on the platform design. I think enterprise has come up with some unique items on the platform in terms of vapor recovery that are different than other projects of its kind. Aren't they?

Yes, absolutely. I mean, our philosophy around minimizing impact is not true just to the pipeline routing but true to the platform design itself. On the SPOT platform, for example, as Graham mentioned, we've included emissions control from the inception of the project, and what makes that unique is if you look at all the other competing projects that have filed applications for licenses, none of them are including emissions controls. And as a matter of fact, they are all fighting the EP to not have to include emissions control. So that makes our project unique.

Yes. Thanks, Ivan. And that talks a lot about Enterprise's internal processes. But we also have a number of external processes where we deal with landowners and the public when we're routing a pipeline project, and that continues on through the operation of the pipeline. So we're all about establishing relationships with those that we interact with on our projects. And Kevin, why don't you tell us a little bit how that process takes place at the outset of a project, and then Phu, if you could follow-up on the operations side?

Absolutely. At Enterprise, we feel like we have a very landowner friendly approach to write-away acquisition. We'd like to meet the landowners out on their property and work with them to do detailed routing on their property and listen to their concerns, whether it's missing trees that they really care about or maybe how their livestock is going to be handled during construction. But it doesn't stop with write-away acquisition. We work with them all the way through the construction process to let them know when the crews are going to be there and what to expect from the different crews. We work with the landowners through the write-away restoration and reseating process. We also go out about a year after construction and go all the way down the write-away, and we look for things like settled ditch or places where the vegetation maybe didn't take properly and reseating may be necessary. So my goal at the end of this process is to hand over to Phu and the operations group a happy landowner.

Yes. And from an operations perspective, we follow through with what Kevin and the projects team may have in terms of agreements with landowners and easements. So our land group and our operations group are very attuned to those agreements so that we're aware of any commitments that are made. We feel it's important for us to understand and honor those commitments and follow through with the landowners. We -- our employees, we live in the same communities, that's our pipelines and our assets. We hire employees from the communities. And so therefore, we believe it's important for us to maintain good relationships, not only with the landowners but also, for example, emergency response agencies that support us. We proactively communicate to the emergency responders. We build relationships with them. We also support emergency responders financially through contributions, and in some areas, our employees are even members of volunteer fire departments or emergency responders. Some examples of things that we've done on the operations side and really in coordination with projects that address landowner concerns. And these aren't just the landowners where we crossed with our easement but it may be also adjacent landowners. As an example of which is, for example, sound abatement, where we've built our pump stations that we've had some feedback that the noise might be above or is unusual to what they have had before the stations have come in place. We've taken additional measures to install sound abatement walls to address some of those. And that's just one example where we try to be very proactive in working with not only the landowners but adjacent in the community to make sure we have good working relationship with them.

Thanks, Phu. I think one other area that we've really been involved in, that's important, and Kevin, you've been a leader in this is, even a domain reform. Why don't you give us Enterprise's view on what Eminent domain looks like?

Okay. Enterprise has been a leader with regard to Eminent domain reform. We've been working for some time to help create legislation that would effectively raise the bar with the way that companies deal with landowners some of the things we've been looking at doing is adding some minimum limits to the initial offer letters that are given to landowners for write-away acquisition. We've been looking at coming up with a standard write-away agreement so that we're all using the same kind of agreement. We looked at expanding the Landowner's Bill of Rights to make it a little more comprehensive to give landowners a better idea of what their options are. And we would like to make it mandatory that companies at least offer to meet with landowners personally, much like the way I described earlier. The goals is to bring about change that not only benefits the landowners but our industry as well.

Thanks, Kevin. I want to shift gears a little bit now and talk about our technical services group. I really believe it's a differentiator within an Enterprise. It serves as the link between our capital projects group and our operations group, and it really allows us to sustain and grow and continue and improve our operations. So I'd like for Angie to tell us a little bit more details about the technical services function within Enterprise.

Our technical services team is made up of a diverse group of departments that includes all the types of engineers that we have in the company as well as our procurement group, our land group and also our pipeline controls. But when we talk about technical experience, it makes me think about our over 500 engineers that we have that really have a great depth of experience. They are leaders in the industry, and they take great ownership in supporting the assets and the projects that they support day-to-day. And I think that ownership comes from the culture that's within the people and the company, but it also comes from the way that our groups are organized and support one another. And so an example of that is our engineers will support projects. So they will get involved in Kevin's project from the very early scope development and concept development stage. And those same engineers will follow that project through supporting Kevin's team through detailed engineering, through construction, through commissioning. And then they will continue to support that same asset as they go into operations and support Phu's operational team on reliability matters and operational improvements. And so there's a natural ownership and feedback loop that goes into having those same engineers see that project and support that asset all the way through its life cycle, that any learnings along the way from vendors, from contractors or from working with operations, they can have a natural feedback loop into the next project. And a good example of this is on our IBDH asset that's currently in operation. The engineers that support that asset today were involved with the project execution and Kevin's team all the way through execution. And now they're involved with the execution of our PDH2 project. And so there's a great opportunity for building in that knowledge and the learnings into the next project and making it that much better. And the other thing that our engineers are involved with and own is the development, improvement of our engineering standards. And so all of these learnings that I've been talking about, our engineers are responsible for making sure that our engineering standards get updated and incorporated with those learnings. And those really serve as the foundation for our safe and cost-effective and reliable design in the company.

Thanks, Angie. That's just an example of how we continue to get better with an Enterprise in our technical development. But Kevin, why don't you give a little bit of interaction that takes place between your group and the technical services group.

Absolutely, a very close interaction. Our project managers work very closely with Angie's technical services group all the way through the process. Our project managers aren't simply coordinating all the engineering and construction contractors that are on a project, but they're working closely all the way through the design process. They will bring the different groups in at the right points in the project for things like model reviews, PNID reviews, HAZOP reviews, that sort of thing. As Angie said, it's all the way through design, through construction, commissioning and then -- and operations.

Thanks, Kevin. We also have a pretty extensive research presence and support of research within the industry. And Phu, you've been a leader within the PRCI, been on the Executive Committee. Why don't you tell us a little bit about your experience and what research we're involved in and how it benefits us at Enterprise.

Yes, sure. So PRCI, Pipeline Research Council International, is a -- it's a nonprofit international organization that's centered around primarily research for energy pipeline companies primarily. We've been a member of PRCI since 2003. While PRC does research in a variety of different areas. I think as it relates to us, a midstream company, we apply a lot of the research that comes out of PRCI to enhance our programs such as our integrity management program that then is further used to improve our safety and reliability how we operate our pipeline. So a couple of examples of PRCI research and how it's applied, certainly, in Angie's technical services team. If you look at the history of PRCI and how the organization has been in involved in the development of in-line inspection technology, just enhancing the capability of in-line inspection technologies to identify defects in pipeline. Another example is the enhancement of nonobstructive examination in terms of how -- the nonobstructive examination is again applied to find defects and improve pipeline reliability and safety. The results of the research is used in a variety of different ways and primarily to enhance whether recommended practice or standards that are used by the industry as a whole. A couple of things on PRCI that I would like to try to highlight, one of which is it is a member involved. It requires member engagement, engagement from all the member companies. And so since 2003, Enterprise has not only contributed financially to PRCI but we've contributed internal resources as well. And by that, our employees are engaged in PRCI in the research. So we're on technical committees. We drive some of the research. We drive the direction of the research. And then as a result of that, we were able to stay ahead of the results of that and then apply. And I think Angie can talk a little bit more about how specifically that's applied within the Integrity management program.

Yes. Phu mentioned that our engineers are engaged in the research and this applies to PRCI as well as other industry research that we're involved with and there's a great benefit that comes from that engagement. And one of the benefits is that we get that knowledge from the research early on, and we are able to shape the research and the outcome of it. And oftentimes, what happens in research is that by the time the research is published and available broadly for the industry, it could be a year or more down the road. And so we're able to benefit from getting that knowledge and data from the research very early on as soon as it's developed and apply that to our programs. And so an example of how we've done that over the past few years as we've applied a lot of the data analytic research that's been done across the industry. And what we realized is that we needed better tools in order to implement the findings of the research within our organization. And so several years ago, we invested in high-power computers, in data scientists and then processes that where we could apply the data analytics that we learned about from our involvement and research internally to improve the safety of both our pipeline and our facility assets. And what we found is that we've really got an outstanding return on that investment, both in terms of safety and in cost.

Thanks, Angie. So we really are a data-driven company, aren't we?

We are. We use data every day.

I think, certainly, the data has allowed us to improve and continue to improve our overall operations. One of the things I think it's important you know about Enterprise, and you can't pick up a paper today without hearing something about electrification, electric vehicles. But Enterprise was involved in electrifying its facilities well over 10 years ago, and we've continued to advance that as we -- as technology has advanced. We've taken advantage of technology to improve and convert many of our unit operations from gas driven -- from being natural gas driven to electricity driven. And I'd like for Angie to explain a little bit more about that and how the evolution of technology has played into that development.

Yes. When we talk about the electrification, it helps to understand what drove some of those decisions. And so earlier, Kevin and I talked about the integration of our engineers very early on in the scope development process. And when they are developing those scopes, they are not only looking at reducing our total capital cost but really what they are looking at is reducing the overall life cycle cost of our projects. And really, the main drivers in driving those costs down is our energy efficiency and then minimizing emissions and waste. And so when we look at that, that naturally will drive us to electrification and it has over the years. All the way back to 2006, our fraction leaders have been entirely built based on electric driven machines. Our IBH plant was installed based on electric driven machines, and then Graham talked a little bit about technology advancement. And sometimes, we're not able to install electric drives because of the size and scale. It's not the technology is not readily available. And an example of that is on our -- to contrast our 2 PDH projects, both of those have very large-sized rotating equipment. And on our PDH1 project, we installed gas turbines for that project just because the technology wasn't available to support the size that we needed for electric drives. But just fast forwarding a few years and having our engineers work closely with the suppliers who were designing and building these large drives, we were able to get comfortable with the technology advancements and apply that to our PDH2 design. To give you an idea of the impact of these decisions. Over the last 5 years, we have either installed or planned to install over 1 million horsepower of electric drives across our company assets.

Angie, this electrification, it really has a significant immediate impact on our carbon footprint. We source 70% of our electric power from renewable sources. So that impact on electrification happens immediately. And looking ahead, by 2025, we're going to have 25% of our electricity source, renewable sources. And that includes our projected power consumption growth over that period.

That's right, Ivan. And we don't just stop there with the installation of electric drives, but we also invest in specialized equipment that allows us to dial in our power usage so that we only use what we need to operate our assets, and we're not wasting power due to the design. We also maximize our heat integration to minimize electricity usage. And then one thing that we've been doing recently that I think is a great advancement is displacing the use of fuel gas and our heaters with hydrogen. And so today, as we operate our IBDH plant, we're burning hydrogen in our heaters and we worked and partnered with our heater vendors for our PDH2 design to allow for burning 100% hydrogen in our PDH2 plant.

So it really is a big impact, all these things that Angie is talking about. The impact of this move to electrification is really directly resulted in 19% improvement in our carbon intensity over the last several years. And if we would have gone with gas-driven turbines for the 1 million-horsepower that Angie mentioned earlier, our carbon emissions would have increased by 30% over that period.

Thanks. Now I want to turn a little bit to the operating cost. Last year, one of the key contributors to Enterprise success was a reduction in operating costs and then really some focus on making those operating costs sustainable. First, I'll ask Phu to touch on what are the -- what do you do in your operating group to reduce cost when we get into a situation like we were last year? And then maybe Angie can follow-up on some of the initiatives that we've had after -- since that time.

Yes. So 2020, the impact to the industry with the pandemic and also the downturn in crude oil prices became more and more important for us to focus on costs and how we operate efficiently. The primary message to our employees, while we are focusing on cost control is that we wanted to make sure that we continue to spend the money on things that impact our safety, reliability of our assets and then the compliance of our assets. And so as it relates to that, just a couple of examples I'll give in terms of reliability being one of them. Throughout the year, we spent a lot of time focusing on things that were routine in nature, routine maintenance in nature. We work collaboratively with stakeholders. And the stakeholders internally Enterprise would be our commercial team, our technical services team, and then certainly, operations and others. And by that, what I mean is that operations didn't work in a silo just to make decisions on when it's time for us to spend money on major maintenance. We would bring in data from a variety of different sources that, for example, decisions around pump and motor overhauls in the past. We may have had it on our schedule or we did have it on our schedule, and we may have done it based on just a time-based pump and motor overhaul schedule. In 2020, we took a hard look at available information that we have, data that came in to make a decision on -- based on how this pump is operating or how this motor is operating, is it safe? Is it still reliable for us to continue to operate and push this maintenance out for some period of time? And using information that comes in, such as vibration information, those kind of things, we were able to collectively make decisions that push out some of our maintenance while still maintaining the reliability of our assets because I think that is very important to make sure that we operate in a manner that we meet our operational commitments. Another example where I think we had a really significant impact in terms of cost savings in 2020 was in the area of drag-reducing agents. DRA, we use DRA in our crude oil pipelines, essentially as a flow improver. The increased flow rate in our pipelines. The amount of DRA you inject in a pipeline will increase the amount of flow that you get through a pipeline. So we wanted to make sure we optimize how much DRA we inject in the pipeline without overinjecting. In previous years, all the DRAs gates that we had out in the field, we may not -- we did not have the telemetry that's available that we did in 2020. The skids that we have now, we have telemetry that tells us when the skids are running, how much they are injecting. And then you take that information, combine it with the data that Angie's teams has to be able to tell us what is the optimal DRA injection rate to be able to operate the pipeline most efficiently and still be able to meet the objectives in terms of the volumes moved for that particular day or for that particular month. That information being brought in, Angie's team was able to use that and collectively be able to drive down our DRA costs significantly in 2020.

To add to that Phu, you talk about using data to drive decisions, and really, your opening was about the timing, the downturn. And what earlier I talked about, we invested quite a bit in terms of data analytics and computing power and building predictive models. And so the timing of the downturn with the fruit of our labor of the past few years of investments really worked out nicely to shift some of our focus or layer on our focus from a safety focus around data analytics to also layer on that cost reduction and optimization focus. And so the DRA optimization is one way in which we did that. But when we think about just, for example, our pipelines, we put together initiative where we brought together the engineers, the operations team, the pipeline controllers as well as the commercial people. And we gave the -- we put the data and the data analytics in the hands of the people that make the decisions every day. And so we were able to empower them to make decisions that drove down the cost of our pipeline. And the way that they knew that was happening is, we put that information right in front of them on their screen. So for example, our pipeline controllers, every day, the screens that they look at to operate our pipelines, they not only have which pumps are operating and how much DRA is being injected but they also have how much it's costing them to operate those pumps, how much it's costing them to inject the DRA and what the total cost is for operating that pipeline in any given time, on any given day. And what that's led to is just a behavior -- a natural behavior for them to drive down the cost of operating our pipelines. And what we found is that, so far, in 2020, we implement about 40% of our long-haul liquid pipelines with this methodology. And our operating costs for the same throughput on the same pipeline has reduced about 20%. So for 2021, we're planning on building out the rest of our long-haul pipelines and hope to see those and expect to see those same benefits. We didn't stop with just the pipelines on the data analytics, but the same cross-functional teams and putting the data in the hands of the people who make the daily decisions, we did across a variety of assets in 2020. And the results of that have been very strong. In 2020, we saw about -- realized about $60 million of cost savings for the same throughput on the same assets, and in 2021, we expect that to grow to over $100 million. And it's not only about cost, it's also about reducing our energy utilization as well as our emissions. So on the energy front, we've reduced our utilization by over 500,000 kilowatt hours for the year; and on our emissions, we were able to reduce for the same throughput over 140 metric tons of CO2, which is basically equivalent to removing the missions from an entire large gas plant.

Angie, one of the things that I found that when we -- the data that we've implemented, when the markets really change, when power costs go up dramatically or natural gas prices go up dramatically, how is that data helping us?

It's helping us. Today is a great example of that. We have the data at our fingertips, and so we can quickly do the analysis of what ifs. If price goes up, then is it economical to run certain assets? Or should we dial them back in order to not have to pay for that extra energy cost?

And as well as being able to make those decisions in real time, I think one of the things that you also have is sustainable savings. People often ask, for the savings that you got in 2020, are they sustainable. And I'll say that the work that Angie and her team have done have made that sustainable. And I think that she also touched on emissions. And, Ivan, tell us a little bit about what -- when we have the data available at our fingertips and a lot more readily available than we have in the past, what does that allow us to do on an emission standpoint?

Yes. Well, Graham, like you're alluding to, I think that we've leveraged data analytics in the same way that Phu and Angie are talking about. There was a time, not too many years ago, when we would do annual or quarterly emissions inventories. And only at that time, we realize we've got maybe a problem regarding emissions, and it may have been going on for some time by the time we find it out. Now with the data that's available at our fingertips, we're able to identify those issues in real-time because we can see that data in real-time and then immediately get with our operations counterparts and work on resolving those issues long before they become a problem.

Thanks, Ivan. 2020 brought its challenges. But I've always been proud of our entire team that's always been able to step up and respond to any challenge that comes up, and the pandemic of 2020 was no different. And I'd like for each of them to give their perspectives on how they manage their business areas during the pandemic. Kevin, you were -- your team was really instrumental in bringing in a major project in on-time and on-budget. Why don't you tell us a little bit about that.

You bet. So that's our M2E3 project. It's a huge pipeline project and executing the project of that magnitude during a pandemic is definitely a challenge. There's a lot of things we had to look at and do differently. On a project that size, we have thousands of people out in the field, the way to move into the field and out of the field every day, and with social distancing, obviously, we had to do that a little differently. We had to change the way that we conducted construction management meetings as well as our safety meetings. We couldn't do those in large groups or first thing in the morning as normal. Those were done after the folks had disseminated to their individual work locations. One of the biggest challenges we had was material deliveries. Because of the pandemic, so many things were late. So an army of contractors out there were working, and we were moving things constantly to keep materials in front of them the entire course of the project. In some instances, it absolutely wasn't possible. And our supply chain group stepped up and was able to reorder materials, expedite it and get materials out to the right locations, at the right time. And at the end of the day, we had a successful project. It's really within our culture at Enterprise simply to find a way to make it happen and adapt to whatever is thrown at us. And as Graham said, when it all finished, we finished this project on-time and underbudget.

And I think that's a great demonstration of being able to persevere through obstacles. Ivan, why don't you tell us a little bit about your team?

Sure, Graham. I think what comes to mind for me is sometimes it's easy to envision environmental health, safety and training as an administrative function that happens behind the desk, but that's just completely untrue. We have to be out there in the field supporting our operations and engineering groups and what they're doing. And probably the prime example would be the way that we conducted training. Obviously, like a lot of folks, we were able to take a lot of our training remote and conduct it that way. However, we quickly came to realize that there's certain operations critical training that simply needs to happen as instructor-led training face-to-face to be effective and that we needed to continue that training. So we really stepped up and started following CDC guidelines for those training and limiting the class sizes to very small groups, implementing social distancing and the wearing of masks often having to add many more sessions so we could accommodate all the people that needed to be trained, but we're able to successfully carry that training out in 2020 and maintain the business.

Thanks, Ivan. Phu, field operations is definitely not a work from home endeavor. Tell me how your group adjusted and was able to succeed last year?

Sure. Similar to what Ivan and Kevin had mentioned earlier on, we took a look at our operations and pretty quickly over the forefront of that, we needed to make some adjustments to how we interact with each other in the field. As Graham mentioned, field operations is not a type of job we can work form home. So it was important for us from a continuity of business to make sure that we had employees that were certainly healthy and capable of coming to work. So a couple of things we did right upfront. We modified our social norms. That was right upfront. Following CDC guidelines, we stressed to make sure that our employees were socially distancing. We stressed at our employees to where face coverings. And the key point there, I think, is social distancing making sure that our employees, while they're working, while they're interacting each other, it's important that they maintain proper social distancing. The other thing that we did is look at the work schedules that we had for our employees and try to minimize the amounts or the potential of cross-exposure in terms of contamination. The just in nature of operations and the way we do shift changes, it's quite often that our employees are in areas where they're passing information back and forth, they are in shift changes. So we had to modify that. We adjusted our schedule to put our employees on modified schedule, such as a 7 on, 7 off schedule. We adjusted the way we did shift changes where we separate them, similar to what Kevin mentioned in terms of the way the project group did theirs. And then I think, lastly, I think, we very effectively and continuously communicated to employees. It was a very good dialogue back and forth. Certainly, with messaging that came from corporate to establish the expectations or the guidelines and then certainly for us to stay in tune with our employees. And I'd say as a result of all that, certainly meeting all of our operational objectives for the year, but as Ivan have touched on at the beginning of this, not only did we meet our operational objectives, we had an excellent safety performance in 2020.

Angie, why don't you tell us a little bit about how your group was able to manage, particularly the control center, that was one of the unique areas that we worked in last year?

Yes. Our control center, our pipeline controllers operate normally out of a centralized control center and the reliability of our pipeline depends on our controllers being able to come to work every day. And so early on, we implemented a lot of the things that Phu mentioned as well as we implemented a contingency plan or risk mitigation plan, where we divided up the controllers in 2 distinct work groups. And we worked one set of -- one grouping of the controllers out of our primary location located in Houston, Texas. And then we would work the next week with a separate group out of our San Antonio backup location. And we switched that back and forth from week to week, to keep separation between our controllers and have a risk mitigation plan in place. And then in addition, I'd like to talk about the great work that our teams did with the cost reduction initiatives and optimization initiatives. The team that did that is our normal day-to-day team that has a heavy load of regular responsibilities. And this year, they took on that extra workload of the optimization activities and initiatives on top of their normal workload. And it's like Kevin mentioned about the culture of the company that when we have challenges, we're going to rise, and our people are going to rise to those challenges. And so I know and I'm certain that they did that this year. They really delivered outstanding results, and I'm very proud of what they accomplished this year.

Thank you, Angie. And in closing, I'd really like to take the opportunity to thank all of our people for the outstanding performance that they had in 2020. We've talked a lot about the pandemic and initiatives that we had last year. One that we haven't touched on is that we had a number of hurricanes in the Gulf last year 7, 2 of which had a major impact on our assets. And throughout all of that and all of the challenges that came about, our our people responded, they stepped up and made a difference. They always make a difference at Enterprise, and that's why we continue to be successful. You can model our business, but you always get beat on that model because you can't model or take into account how our people are going to always respond when issues come up. So in closing, I'd like to thank you for the -- I'd like to thank all of the panel for their excellent dialogue and discussion, and I'd like to thank you for younr -- listening to us, and thank you.

Next up, we'll have a discussion hosted by Bob and Yvette on asset optimization.

Good morning. My name is Bob Sanders, and I'm the Executive Vice President of Asset optimization. And here with me today is Yvette Longonje. She is the Vice President of Distribution. We're going to talk a little bit about asset optimization. Asset optimization really starts with our people and their drive. At Enterprise, we have a personal mission statement, which is: "Do the best you can every day." We have a collective statement that is: "With collaboration, perseverance and hard work, we can accomplish the extraordinary." Let me tell you a brief story that Mr. Duncan told me some 35-plus years ago, and that was: "We can do the best commercial deal, engineering, can design and build it, operations can operate it. But if we don't move the product from A to B for our customer, we don't get paid." He finished it with to make sure we get that done. Yvette, would you like to walk us through some of what distribution does on a daily basis?

Well, Bob, the role of distribution is to keep product moving in the most efficient way possible. When people think about Enterprise, I think they think about our pipeline systems. They might even recognize our trucks on the road. But distribution, in addition to that, is also involved in the scheduling of marine movements, rail and facility-to-facility transfers. On any given day, we scheduled the transportation of 7 million barrels of product on behalf of our customers. You might ask yourself, how do we do this? Because Enterprise is a builder of systems and not stand-alone assets, we're able to utilize the full flexibility of our integrated storage and pipeline facilities to meet all of our customers' transportation needs. When I think about optimization, I really think about 2 things. I think about cost reduction and I think about speed. The role of distribution and furthering cost reduction is really focused on reducing energy usage. We're able to schedule our pipeline such that we're using the most economical pump configurations to lower our energy consumption. The second thing I think about is scheduling our movements such that we're able to net up product movements between facility. I've essentially fulfilled the receipt obligation and a delivery obligation without moving a barrel at all. When I think about those things that drive demand or might cost transportation constraints, I think about weather. We staged barrels ahead of customer requests to reduce transit times. We also bring in vessels ahead of channel closures. We actually invested in our own labor to be able to do this, and we worked very well with our counterparts of the Houston Ship Channel to use their vacant docks and labor as well. This ensures continuous loading and our customers can count on that. When you think about the scheduling of 7 million barrels of product every single day, you might imagine a room with a bunch of servers and computers. And though we fully embrace technology and automation as a way to be more efficient, the real drive behind the success of this group are the people. We have 100 individuals in distribution that schedule assets that run 24 hours a day, 7 days a week, 365 days a year and are always available on the other side of the line when our customers have needs.

So optimization is really meeting market demand. Like, we did when we converted our NGL pipeline, Seminole pipeline from West Texas to the upper Texas Coast to crude oil. So let's talk a little bit about 2020 and the demands of 2020. As we're all very well aware of, we were -- the world was hit with the pandemic. And one of the offshoots of that was transportation came to a screeching halt. Nobody was driving a car. Nobody was getting on a bus. Nobody was getting on a plane, but there was still the need for diesel to move essential goods and services. In order for a refinery to operate, they've got to make all 3 products. They've got to make motor gasoline. They've got to make diesel. They've got to make jet. They can limit the jet, but that means they make more diesel. With Enterprise's integrated assets, we were able to put into play more than 20 million barrels of storage at Mont Belvieu for motor gasoline and diesel without hampering our NGL business. Something that I think gets lost on 2020 was, in addition, the United States was hit with 8 named tropical storms during 2020. Yvette, walk us through how distribution aided our customers in that regard?

Bob, I don't think anyone could have anticipated the occurrence of so many named storms within such a short period of time. I spoke previously about our proactive approach. We work very closely with operations and understanding our obligations to our customers, we're able to identify the most critical pump stations to stage temporary generators. During that time, we were also able to call vessels in ahead of channel closures to be able to continuously load vessels anytime the channel was closed. Crackers in the Gulf Coast were the most impacted, demand to those areas really came to a screeching halt but supply was unrelenting. Our position as the world's leading NGL storage facilities would allowed us to shield our customers from those impacts. We built 13 million barrels at our Mont Belvieu storage complex in August and September alone, 7 million barrels in September. Numbers we hadn't seen since Harvey. It took a lot of effort to pull all this together, but our customers can always rely. They will always be there to meet our obligations, and we'll always be proactive about those approaches.

Thank you. Optimization is also about being proactive, and it's not just "an inside the Enterprise fence type of operation." Back in the fall of 2018, it became apparent that the movements on the Houston Ship Channel were changing the dynamic, from a 2-way traffic situation to a 1-way traffic situation. We felt that, that was imperative that we maintained 2-way traffic. Enterprise stepped up and formed a coalition and decided the way to ensure that we kept 2-way traffic on the Houston Ship Channel was to get a law passed in Austin. In order to go to Austin and convince the legislature that it was necessary, we had to have the data to backup our perception that it was going to cost 25% to 40% reduction in our transportation needs. Yvette, walk us through how we did that?

Bob, with our dock activity accounting for a large percentage of the business on the ship channel, I really don't think anyone was more equipped to recognize, analyze or quantify the impacts of this change. We sought out the help of a third party, a marine specialist, a specialist in simulation. We actually had to go outside of the United States to find someone with this skill set. The first thing we did was we established a base case using historical data, much of our data and also data from public agencies. I don't think a lot of people realize that there are up to 20,000 transits on the Houston Ship Channel every year. We had the ability to track every vessel, specification, type and service. Second thing we did is, we layered the port rules on top of that. Here, at Enterprise, we have individuals specifically dedicated to marine affairs that understand the waterway constraints and understand the port rules and have great relationships with those that govern them. The last thing we did is we imposed the constraints imposed by these new container vessels. What we looked at, we looked at the delayed hours within new container vessels against the base, and the results were compelling, and they were empirical. It showed the impact not just to our business but to all business on the channel. We did what Enterprise does best. We saw a problem, and we went ahead first thing fixing it.

With that kind of detail, we were able to convince the legislature in Austin that maintaining 2-way traffic on the ship's channel was necessary, and that law did get passed. We didn't stop there. The Port of Houston had been working for 5 years on an expansion project of the Houston ship channel. And we went with the Port of Houston arm-in-arm to DC, to lobby the arm of core of engineers as well as Congress to get that project added to the word of 2020 bill, which is the Water Resources Development Act. That bill did get passed. We didn't stop there. We went on to get what is necessary, which is a new start that allows the port to start construction of the project as soon as the engineering is done, so that the expediting of the expansion of the ship channel from 533 to 733 can match the increased demand that we're anticipating by the '25, '26 time frame. At Enterprise, the asset optimization starts at the concept phase. Commercial has an idea, a customer asks a question, operations think there's a better way to do something. We get engaged at the very beginning. We talk about it. We walk through it. If we can get it to a point to where it may be a project that is viable, we then work on the engineering design with engineering. We get an approved AFE. We follow it all the way through construction completion and implementation. And we also then do a look back to make sure that projects that we have funded and put in service are generating the kind of returns that we were anticipating. With all that being said, I'm going to go back to the beginning: optimization of the Enterprise is about our people. We do the best we can every day. Thank you.

Next, we're going to hear a discussion on cybersecurity by Paul Flynn.

Cyber attacks have become remarkably commonplace. And cyber-related fraud is costing businesses billions of dollars. It's no surprise that cyber threats have become a growing and global concern and not just for businesses, but for investors, customers, suppliers, regulators and others. These cyber threats vary considerably, from the unsophisticated teenager in the basement-type hacker to the politically motivated hacktivist; and from highly advanced organized crimeware to government sponsored nation states professional hacking teams. As a critical infrastructure company, we take these threats very seriously. And our cybersecurity program here at Enterprise is continuously evolving and improving to address these threats and safeguard our infrastructure. For today's presentation, I'm going to provide a high-level overview of our cybersecurity program, and I'm going to start with our cybersecurity strategy. What we're doing to manage and mitigate cyber risk for the company? Next, I'll talk about our engagement and collaboration with the outside cybersecurity community, particularly within the energy sector and our use of external cybersecurity advisers and the important role that they play in helping to keep the company safe from cyber attacks. And finally, I'll touch on executive support and oversight of our program, including our Board of Directors. Simply put, the purpose of our cybersecurity strategy is to detect, contain and respond to cyber dangers without delay. We take a risk based, layered, defense and depth approach to cybersecurity that leverages widely adopted standards like the NIST Cybersecurity Framework. Our strategy is built around 3 main pillars or layers of protection. They are: our security tools, our policies and are all important employee cyber awareness program. We use the latest state-of-the-art, best-in-class security tools that includes multiple layers of advanced antivirus, Internet filtering, e-mail filtering and firewalls. Our critical pipeline and plant control systems are further protected by yet additional layers of advanced firewalls. For remote access, we use multifactor authentification to prevent unauthorized access even if an employee's password were stolen. And we have a number of policies that support our strategy, including an acceptable-use policy, written in plain English, that guides employees on safe computer behavior and avoiding risky computer behavior. And a rigorous file backup and recovery policy that's exercised regularly to ensure that all company data can be quickly restored in the event it becomes compromised. And in the event of a disaster, whether it's caused by a cyber attack or the weather, we can recover all of our critical business systems at our secondary data center, most in a matter of minutes. We regularly conduct tabletop exercises that simulate cyberattacks, testing our crises processes, our security tools, our proficiency and overall preparedness. And finally, our lease privileged access policy says that employees can only access data where there's a genuine and approved business need. And this access must be reviewed and reapproved by management on a quarterly basis where that access is removed. But perhaps our best line of defense against cyber threats is our employees and our employee cyber awareness program. The company's commitment to data security, data privacy and safe computing practices start at the very top, with our office of the Chairman, and extends to every single employee and contractor throughout the organization. We are constantly educating employees and contractors about cyber dangers through lunch and learns, and IT security alerts, and online training, and our highly effective fishing e-mail campaign, where every employee and contractor receives a new round of fishing e-mails each and every month. And should they slip and click on that tempting linker attachment, they're immediately directed to a training opportunity. I'm pleased to be able to say that the enterprise employee and contractor click rate on fishing e-mails is well below the industry average at less than 10%. Cybersecurity is no doubt a team effort and requires close collaboration across industries and between the public and private sectors. Enterprise is a very active participant in the cybersecurity community. In fact, we're a founding member of the oil and gas ISAC, which is short for, Information Sharing and Analysis Center. The ISAC is an industry neighborhood watch program for cybersecurity, where members share cyber threat intelligence in real time. The group was formed in 2014 and includes 56 energy companies, representing all of the major players in the upstream, midstream and downstream businesses. In addition to the ONG ISAC, we regularly participate in cybersecurity briefings, conducted by the Department of Energy and the Department of Homeland Security and the FBI. We're also very active in a number of other cyber groups. And this active participation in the cyber community is an important and valuable part of our overall cybersecurity program. External cybersecurity advisers also play an important role in our program by auditing our security posture, helping to uncover potential vulnerabilities and making suggestions and recommendations for improvements to our program. Every year, we contract with outside cybersecurity experts to perform unannounced simulated cyber attacks against our network, testing the effectiveness of our security program as well as our abilities to detect, contain and respond to sophisticated cyber attacks. And we regularly conduct penetration testing of our Internet-facing applications, hiring third-party expert ethical hackers to try and find weaknesses in our systems so that they can be remediated and to detect. And stop cyber threats, we've engaged with a widely recognized leader in cybersecurity to monitor our environment: every computer, every server, 24/7, using their next-generation security platform. These are just a few examples of how we're leveraging outside cybersecurity advisers to help keep the company safe from cyberattacks. And finally, we enjoy very strong executive support and oversight of our cybersecurity program. Several years ago, we formed an executive Cybersecurity steering committee that includes Randy Fowler, our co-CEO; and Hap Weitzel, our General Counsel, along with other company executives, representing Investor Relations, public relations, HR, operations and engineering, accounting, audit and risk. This committee also includes an external cybersecurity and legal expert. The committee meets quarterly to discuss the current threat landscape, risk mitigation strategies and to review and approve new projects and initiatives to further our overall program. With assistance from our outside expert, this committee created a formal cybersecurity incident response plan. So that in the event of a security breach, we have the right personnel and procedures in place to effectively deal with the threat. In addition to oversight from this committee, we provide our Board of Directors with periodic cybersecurity updates, Apprising our Board members of the types of cyber threats they should be mindful of and the actions we are taking to protect the company from these threats. That wraps up my overview of our cybersecurity program. Thank you.

Next up is Hap and Lindsey to discuss governmental affairs and industry issues.

Good morning. I'm Hap Weitzel, and with me today is Lindsey Miller. We're here today to talk to you about how the government relations team at Enterprise works with the other management teams at Enterprise to help ensure the durability and sustainability of our company.

At Enterprise, we take pride in actively participating in the political process with the goal of educating policymakers and stakeholders in support of responsible laws and regulations that meet societal and business needs while promoting federal, state and local economies. In our advocacy, we are committed to transparent, ethical and responsible engagement, governed by all applicable state and federal laws and regulations. At Enterprise, we do encourage our employees to participate in the political process. This is the best way that individuals can exercise their constitutional right, and we think that people should move forward with issues that they are passionate about. However, we also let employees know that they should not be engaging politically on Enterprise's behalf and less explicitly authorized by the company.

So in the old saying that all politics is local. At Enterprise, we're committed to working with and collaborating with the members of the local community to make sure that our presence there improves the community and makes people happy that we're there. Lindsey?

We also collaborate with the number of state, regional and local trade organizations with the mutual objective to share information and advance sound and meaningful policy initiatives. One of the trade initiatives that I'd like to highlight today is our involvement in the Texas Methane & Flaring Coalition. TMSC is made up of like-minded companies working in conjunction with the railroad commission and the TCEQ to continue to reduce vapor emissions flaring across the state. We, as the industry, are working with our colleagues on best practices to continue to communicate with regulators to make sure that we are moving forward in this area. At Enterprise, we are also involved in the Governor's Texas Economic Development Corporation. This is a group made up of CEOs across the state with Governor Abbott and his leadership team working to continue to bring investment to Texas to make us an economically robust state going forward. To that end, I'm going to toss it over to Hap to talk a little bit about some of the initiatives we are involved in.

Thanks, Lindsey. There are various projects that Enterprise is involved with from a government relations standpoint. I'm going to briefly touch on a few and then talk about one in particular. One of the projects that we're working very hard on and we're proud of is the Eminent domain reform legislation. Eminent domain is an important power, and we respect that power. And we are working with various legislators and industry leaders to come up with legislation that promotes best practices and is transparent and fair to everyone involved. Another project, government relations project, that we work on is the preservation of wildlife. We work with various state and local wildlife agencies to make sure that our projects have the least impact possible upon our environment. But if I had to mention one project that really epitomizes and covers almost everything with respect to Enterprise and its government relations activities, it would be Project 11. Project 11 deals with the widening and deepening of the Houston Ship Channel. As you may now, Houston isn't on the coast, unlike Los Angeles or New York. We're not right on the water. However, the port of Houston is the #1 port in the United States in terms of tonnage. How is that possible? The answer is that the Houston Ship Channel is a 52-mile channel that goes from the Gulf of Mexico all the way up to the Port of Houston and allows major ships to come in and out to transact the business of the state and the local community. It is responsible for over 3 million jobs a year, $802 billion of economic impact and over $38 billion of tax revenue every single year. It involves over 230,000 transit up and down the ship channel, making it busier than the ports of Los Angeles, Long Beach and New York combined. That's all wonderful. That's amazing. So what's the issue? Well, the issue is that the Houston Ship Channel was 530 feet wide, and when they decided to make it that wide, it was the mid-to-late 1960s. Project first started in 1968 to widen the channel to 530 feet. And quite simply, quite a few things have changed since 1968 when we hadn't even landed on the moon yet. The population of the world has more than doubled. The population of the Houston metropolitan area has increased from 1.6 million to over 7 million people. Ships are larger. There are more people to service. There are many more imports and exports going in and out of the channel. And it's simply time that it'd be expanded. And so Project 11 is the 11th project to improve the Houston Ship Channel. It's not an Enterprise project. The sponsor in charge of this project is the Port of Houston. But Enterprise has significant assets on the port and on the ship channel. Now why is that important to us? Well, you've heard earlier today, Tony and others talk about the future of demand for hydrocarbons around the world. And given that the United States only has 331 million people, but China has slightly over 1.4 billion and India has slightly less than 1.4 billion, the primary increase in demand worldwide for hydrocarbon products is overseas. And the Houston Ship Channel is a major -- plays a major role in filling that need. So how does government relations fit into all that? Well, the first thing you need to understand about Enterprise products is that there are no such things as a government relations project at Enterprise, they are Enterprise projects and we work together as teams. And government relations, like the legal department, the accounting department, are here at Enterprise to help the business team achieve the business goals of the company. So when we talk about a government relations project, like Project 11, at Enterprise, where we start is with the business team involved in that. In this case, the majority of the assets on the Houston Ship Channel are under the responsibility of Bob Sanders, who you've already heard talk this morning. And so Bod is the leader of the team on Project 11, even though he's not in government relations. Bob works with other members of the team, under the leadership of our CEOs and with their direction, and a lot of help by several people, in particular Vijay to crews, to help evaluate and formulate what the company's business goals are as they relate to our assets on the ship channel. So that's the first key part of the team. Where does government relations fit in? Well, that's Lindsey and I, and we come together to try to work with Bob and Vijay and Randy and Jim to help come up with strategies and methods to help implement those goals, working side-by-side with the team. But that's not all we have. Lindsay and I do our best, but we work with outside consultants and outside lobbyist to also help formulate and execute on that strategy. So that's the Enterprise team on a government relations project. But as I said a minute ago, this isn't an Enterprise project. This is a Port of Houston project, a Houston area project. There are over 150 private terminals on the Houston Ship Channel, and there are a lot of interested parties who will benefit from this project. So we work with the leadership at the Port of Houston and with other stakeholders and other industry leaders,to go help try to make this project happen. We go side-by-side, sometimes together, sometimes independently, but we want to go out and spread the message on why the ship channel is so important to the people of Houston, the people of Texas, the people of the United States and the people of the world, and a whole lot of people work together to help move this ball forward. So who all did we talk to? Well, the answer is almost everybody. We, along with the port and others have talked to local officials, state officials, county officials, federal officials. We talk to Congressional leaders. We talk to department heads. We talk to cabinet members. We talk to the governor's office. We talk to state senators and state representatives. And quite frankly, this is one of the largest team efforts that I've ever seen. I'm very pleased to announce that because of the efforts of all of these team members, with a particular shout out to Bob and Vijay, that recently Project 11 was passed as part of the Word of Bill and received a new start on January 5, 2021. So what does that mean? This is a wonderful success for the ship channel, for Enterprise products, for every other company on the ship channel, for the citizens of Texas in the United States. So what does this mean? It means an additional 6 hours of safe daylight traffic that can happen on the ship channel. That results in an additional 1,400 transits every single year, which results in 91 million tons of additional traffic, equaling approximately $200 billion and additional economic benefit to the area and to the country based upon this channel. In short, it will make the ship channel safer. It will help the environment. It will increase jobs. It will increase taxes; taxes, which help pay for schools and programs that we need. It will make the world safer. It will decrease potential need to be in disputes in the Middle East. It will make the world a cleaner planet. All of these things you heard Tony reference earlier today. This project is great. It is great for enterprise and our business assets. It is great for the people in the Houston metropolitan area. It is great for the United States and its balance of trade, and it makes the world a cleaner, safer place, and we are proud to have played a small role in helping this happen.

That ends our discussion today. Thank you for joining us, and have a good day.