Born to Flow, Part 2 - Cheniere's Midship Shuffles Gas Flows East From SCOOP/STACK Plays

In the nearly three months since it began initial service, natural gas flows on Cheniere Energy’s Midship Pipeline out of the SCOOP/STACK have ramped up, and now consistently top 700 MMcf/d. This, despite production from the Oklahoma basins declining by close to 10% in that time. In other words, Midship is doing what it was supposed to do — namely, giving producers and shippers incremental capacity to reach relatively more attractively priced markets. However, the pipeline was also meant to connect that supply region with growing LNG export demand on the Gulf Coast, which has been slashed in recent months as global oversupply and poor economics have marginalized U.S. LNG cargoes. That raises the question, where are Midship flows heading? Today, we provide an update on Midship gas flows.

This is a follow-up to the Born to Flow blog we wrote in early May, a couple of weeks after Midship first came online. Midship is the recently commissioned large-diameter greenfield pipeline that was built to move an initial 1.1 Bcf/d (and potentially up to 1.44 Bcf/d) of associated gas production from the Cana Woodford field’s SCOOP/STACK plays in central Oklahoma south to third-party interconnects at the Oklahoma-Texas border (orange dots near the center of Figure 1). These downstream lines — namely Kinder Morgan’s Natural Gas Pipeline of America (NGPL; green line) and Midcontinent Express (MEP; yellow line) pipelines, and the Gulf Crossing leg (purple line) of Boardwalk Pipeline Partners’ Gulf South Pipeline (GSPL; lavender system) — can then move the gas east and south to the TexOk Hub in northeastern Texas or the Perryville Hub (pink circles) in northeastern Louisiana for further delivery into the U.S. Southeast and Gulf Coast markets, including making a path down to the LNG export terminals along the Texas/Louisiana shores. Midship has 925 MMcf/d in long-term commitments from producers Marathon Oil Corp. (250 MMcf/d), Gulfport Energy Corp. (300 MMcf/d), and Devon Gas Services (300 MMcf/d), along with a 75-MMcf/d commitment from Cheniere’s Corpus Christi terminal.

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