So we had to look out two-three years and say, when do we need to think about looping that 30-inch segment. There’s also available transport out there from some of our competitors. So we can move — I think we’ll move the lion’s share of our volumes on our own pipe. There can be transportation agreements that can be had with some of our competitors as well. So really, for us, all options are on the table, whether it’s us building a 30-inch down the road or utilizing some excess capacity from some other NGL pipes.
Scott Pryor : Yeah. And Matt, I would just add the fact that our West leg, we’ve shown that we can actually operate that above the 600,000 barrel a day nameplate that we have kind of put out there. So that volume along the West leg, along with volumes that are coming in from the north are all feeding through the 30-inch pipeline. We’ve got still a lot of operating leverage with the 30-inch pipeline. And certainly, Daytona provides us a lot of operating leverage going forward for periods of time.
Theresa Chen : Thank you.
Matt Meloy : Okay, thank you.
Operator: Our next question comes from the line of Neel Mitra with Bank of America. Your line is now open.
Neel Mitra : Hi, good morning. Thanks for all the detail on the CapEx spend. I wanted to follow up on the last question and the $550 million related mostly to downstream. Assuming you’re spending about half of a frac each year, that leaves about $300 million each year for, on average, transportation and exports. So first of all, is there any ability to meaningfully expand Galena Park at this time? Are there land constraints? And then second, with the NGL pipe build oversupply, do you see your need for expanding pipe elongated just because you’re able to hold your pricing power when others are competing for barrels?
Scott Pryor : Neel, this is Scott. I’ll start it off and just say that let’s — when we first think about the pipe, recognize that today, we utilize third-party pipes for volumes that are coming into our Belvieu facility today. And when we think about the growth that we have on the G&P side and the Daytona pipeline, we are not out there fighting for fees relative to fill up our existing capacity and our expected capacity that we would have on Daytona. So all of that kind of folds hand-in-hand with the growth that Pat and his team on the G&P side have relative to transportation. Matt alluded to the fact that if there is capacity on industry pipes, we — again, because we utilize that today, we can always look for opportunities to utilize that to bridge us to whenever we might need to do a loop around our existing system.
As it relates to Galena Park, we have a really good idea of what the next expansion project looks like. And it’s a variety of factors from adding refrigeration to adding pipe, to adding potential docks and things of that nature. So we’re keeping, obviously, a close eye on what that timing needs to be relative to our growth, again, driven by our G&P business. And we’ll continue to evaluate that. So I will say, again, the expansion that we had in the fourth quarter that we’re benefiting from today, the nighttime transits, both of those really are hand-in-hand expansion projects on their own without having to spend a lot of capital. So we’ll continue to look for ways to debottleneck if possible to get incremental capacity as well. So I think we’ve got a lot of opportunity and some runway with the existing assets that we have.
But we do have space available to expand at Galena Park.
Neel Mitra : Perfect. And if I could just follow up quickly. One of your peers mentioned for their oil outlook in the Permian that almost all of the growth would come out of the Delaware versus the Midland. I know that you aren’t necessarily representative of the overall basin. But could you just perhaps break out what you’re seeing with producer activity between the two basins in the Permian?
Matt Meloy : Yeah. I mean we see growth in the Delaware, but we see significant growth in the Midland as well. So we see growth across both of our footprints, really active producers in both. So on our footprint, we see growth in the Midland and we see growth in the Delaware.
Neel Mitra : Okay, thank you.
Matt Meloy : Thank you.
Operator: Our next question comes from the line of Keith Stanley with Wolfe Research. Your line is now open.
Keith Stanley : Hi, good morning. One follow-up on Daytona just thinking to next year, 2025. Do you expect volumes on Daytona to simply tie to Targa G&P volumes? Or are there material third-party volumes that you’re expecting to pick up when the pipeline comes into service?
Scott Pryor : Hi, Keith, this is Scott. I would say it’s predominantly driven by our G&P footprint as to what we’ll be feeding into Daytona. So it is a combination, but I would say the largest proportionate share of that is going to be related to our G&P and the additive of the plants that we’ve already announced and any potential plants going forward.
Keith Stanley : Got it. Thanks. And then, Jen, wanted to clarify on the cash taxes. So expectation, I think you said full 15% AMT cash tax rate in ’26 and then statutory 21% tax rate in 2027. And then relatedly, how would that house pass legislation, which brings back bonus depreciation potentially impact that outlook?
Jen Kneale : We are pretty borderline right now, whether we would be subject to the AMT in 2026 or 2027. It’s actually pretty close. So that — we’re trying to give you a conservative look right now that — based on our latest forecast we may be subject to the AMT. And then in that scenario, in 2027, we’ll have worked our way through our net operating losses and would be fully subject to the statutory tax rate. To the extent the existing bill that — moving its way through gets passed, and we do see a return of accelerated bonus depreciation, that would be a big help to us. And that may delay things, call it, a year or so based on current forecast. Ultimately, we’d have to see what the final policy is that gets passed, but that would be our early read right now.
Keith Stanley : Thank you.
Jen Kneale : Thank you.
Operator: Our next question comes from the line of John Mackay with Goldman Sachs. Your line is now open.
John Mackay : Hey, thanks for the time. I wanted to go back to the potential export expansions. Maybe this is one for Scott. I appreciate the color. But I guess when you guys are looking high-level, top-down from a strategy standpoint, if we think about the quantity of NGLs coming off your Permian processing footprint and how much of that on a percentage basis moves its way on to the export side, do you want to be able to hold that percentage going forward? Are you comfortable with that percentage dropping? Do you want to increase it? Just any kind of directional strategy thought would be interesting.
Matt Meloy : Yeah. Sure. Yeah. As we think about really from G&P all the way through our dock, we want to make sure we have the capacity to handle the volumes coming from our G&P footprint. And so that’s kind of how we think about staging transportation, fractionation. And that goes for export as well. We want to make sure we have a good market for propane and butanes. As Scott mentioned, that’s really what we export. So with the expansion that just came on and the nighttime allowance of kind of, call it, 5% to 10%, I think that gives us some cushion as we go forward. And as we see really how much capacity that nighttime opens up for us, that gives us some good cushion before we’re going to need another export project. But we are already looking at scoping.
And so the timing is kind of to be determined, but do we need refrigeration, do we need a pipeline, are we looking at dock. But those projects are not the really large-scale, I’d say, greenfields or brownfield. I kind of view those as more debottlenecking. You have one pinch point, you spend a couple of hundred million dollars and you get some excess capacity, then you do the next and then you do the next. So those are the things we’re kind of looking at over the longer term. But yeah, we want to make sure we can handle the volumes coming across our system.
John Mackay : That’s clear. Thank you. Maybe just one last quick one. You mentioned you’d caught up on the compression side. Obviously, we’ve been hearing about tightness in the compression market across the board. One of your peers talked about this as being a potential relative guardian on growth even going forward from here in the Permian. Maybe just your high level thoughts and whether that actually is a bit of a constraint at this point or it’s gotten better versus third quarter.
Matt Meloy : Yeah. I mean we have the issues we talked about last year was really just kind of being behind on our — getting the compression all said and getting that done last year. We had a lot of compression come on late last year, and then you saw our volumes in Q4 really move up. We have another talked about $400 million of compression. So we ordered that out about a year right now for compressors. So we tried to get ahead of it as we saw we were getting behind last year. We just approved another AFE the other day to order some more inventory to try and get ahead of it and stay for 2025. So part of that does depend on volume growth. When you see a lot of volumes, if it exceeds our forecast, you can end up having some pinch points. But we’re trying to be smart, look at the forecast and stay ahead of it.
Pat McDonie : Yeah. And I think the only thing I’d add, Matt, is lead times have not come down. The lead times are still long. So that problem still exists. We’ve just gotten out in front of it.
John Mackay : If I could just ask one follow-up on that. Caterpillar announced a capacity expansion on their large engine line, I guess, a week or two ago. Any initial read on whether that should bring that down from a year to something a little better?
Matt Meloy : I have not heard any change in lead times.
John Mackay : Fair enough, thank you. Appreciate the time.
Matt Meloy : Okay, thank you.
Operator: Our next question comes from the line of Michael Blum with Wells Fargo. Your line is now open.
Michael Blum : Thanks for squeezing me in. Just wanted to ask if any update on the Apex Permian gas pipeline? And I’m assuming the $1.7 billion run-rate does not contemplate that project.
Bobby Muraro : This is Bobby. We continue to work on all the options to get gas out of the basin, which includes Apex. We’ve said it before and we’ll say it again, our number one priority is that gas continues to flow out of the basin so that NGLs can come out of our plants and go down Grand Prix and go across our docks. Last call, I think I talked about the fact that several other projects that fit the parameters that we would want to — back have raised their heads. And we’re working hard on those along with Apex and everything else. So I am — every month that passes, I get more encouraged by the work we’re doing to make sure that a pipe gets built and comes online ’26-ish. And I’m confident that something will get done this year, whether that’s an Apex or one of the multiple options that we’re looking at to increase egress out of the basin.
