Energy Transfer (NYSE:ET) has been in the middle of a building boom over the past few years. The energy company has invested billions of dollars in expanding its midstream footprint, which is helping fuel high-octane earnings growth. While the company is starting to wind down its current growth phase, it has several more projects in development to keep its growth engine well fueled.

CFO Tom Long ran through the company's current backlog as well as its key development projects on the second-quarter call. While he highlighted several opportunities that Energy Transfer is pursuing, the company's management team seemed particularly excited about one project.

A person in a suit celebrating next to a black barrel with cash coming out of it.

Image source: Getty Images.

Drilling down into what's coming down the pipeline

After providing a brief overview of the company's second-quarter results and an update on guidance, Long started discussing what lies ahead. He began by saying, "I want to provide an update regarding the latest developments on our growth projects." First, he talked about the company's joint venture with Shell (NYSE:RDS.A)(NYSE:RDS.B) to develop the Lake Charles LNG export facility. He noted that the companies signed a project framework agreement in March and invited engineering and construction companies to bid on the project in May. He said that "Energy Transfer is actively marketing its 50% of the LNG off-take" so that it can secure long-term contracts with customers for this output. The partners remain on track to potentially approve construction in the first half of next year.

He also noted that the company is working on several expansion opportunities at its Nederland terminal in Texas. He said that it recently moved forward with an LPG expansion project at that location and is "looking to further expand our natural gasoline export operations at this facility." He also said that we're "advancing discussions on a VLCC [Very Large Crude Carrier] project that would be connected to our Nederland terminal." That project would enable the company to load supertankers with crude oil for export to global markets.

Long then said that "another project we are very excited about is our Bakken pipeline capacity optimization." He noted that the company received enough market interest from potential shippers to pursue another expansion of this system. As a result, it could increase the capacity of the 570,000 barrel-a-day pipeline by as much as 1.1 million BPD in the future.

An oil pipeline in North Dakota.

Image source: Getty Images.

Why Energy Transfer likes this project so much

Energy Transfer's management team drilled down a bit deeper into why they're particularly excited about expanding the Dakota Access Pipeline (DAPL) in the Bakken. Chief Commercial Officer Marshall McCrea stated on the call that: "It's funny, little things like that we're pretty excited about. If you look at the opportunities and the needs to provide capacity up there, nobody compares to DAPL and the beautiful thing about DAPL is that all we have to do is add pumps to move materially more volumes."

As McCrea points out, it won't take much more than adding new pumping stations along the existing pipeline to nearly double this system's shipping capacity. That's much cheaper than building a new pipeline, and the company can earn an excellent return on investment to expand this system. That low-cost, high-return project is exciting because it can quickly boost cash flow while meeting the needs of shippers in the region. That gives it a leg up on competitors that are also trying to move barrels out of the area.

It might not be a headline grabber, but it can still move the needle

Energy Transfer has built several major midstream infrastructure projects over the years, including the initial DAPL system. While those projects enable it to put lots of capital to work at good returns, the incremental expansions that come later can produce even better ones. That's why its favorite development project right now is a potential high-return expansion of DAPL. While it might not excite investors as much as larger-scale developments like its LNG project with Shell, the high return potential thrills the company's management team.

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