Permian Highway Pipeline shut in after ‘operational incident’: Kinder Morgan

Kinder Morgan owns and operates natural gas pipelines across pretty much every part of the U.S., from California to Massachusetts and North Dakota to Florida. But if you look at a map of its gas pipeline assets, you’ll notice a focus on lines in the Lone Star State that serve as critical pathways for Permian- and Eagle Ford-sourced gas flowing to Mexico, Texas’s Gulf Coast and a number of existing and planned LNG export terminals. Now, Kinder is poised to significantly expand its pipeline network in that part of the world with the planned $1.8 billion acquisition of NextEra Energy Partners’ STX Midstream unit, as we discuss in today’s RBN blog. 

If it’s not one thing, it’s another in the Permian natural gas market. Just as it appeared that prices in the West Texas basin were finally turning a corner and strengthening with the full start-up of Kinder Morgan’s Gulf Coast Express Pipeline (GCX) late last month, various issues have again conspired to send daily Permian cash prices back down to near zero yet again. And it’s not just the daily spot markets that have come under pressure; forward prices were also severely discounted a few days ago when Kinder Morgan announced that the in-service date of its next long-haul pipeline from the region — the Permian Highway Pipeline project — would be delayed from late 2020 to early 2021. Keeping track of the roller-coaster ride of Permian gas prices and the drivers behind the highs and lows continues to keep heads spinning. Today, we explain the latest wild moves in the Permian natural gas market.

The race is heating up for building natural gas pipeline takeaway capacity out of the Permian. Associated gas production from the crude-focused basin is at record highs this month and gaining momentum, which means that without additional pipeline capacity, the Permian is headed for serious pipeline constraints — and potentially negative pricing — by late this year or early next, which would, in turn, limit crude oil production growth there. Midstreamers are jockeying for the pole position to move surplus gas from the increasingly constrained basin to LNG export markets along the Gulf Coast. One of the contenders, Matterhorn Express Pipeline (MXP), a joint venture (JV) between WhiteWater, EnLink Midstream Partners, Devon Energy and MPLX, announced its final investment decision (FID) late yesterday. In today’s RBN blog, we provide new details on the greenfield project.