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.
The RBN NATGAS Haynesville is a weekly natural gas fundamentals analysis focused on supply, flow, and LNG-driven demand dynamics within the Haynesville basin.
Natural gas production is at or near record levels in both the Permian and the Eagle Ford. So are gas exports out of Texas to Mexico (via pipeline) and the rest of the world (via Corpus Christi LNG and several other liquefaction/export facilities up the coast). As we said recently in OMG, more gas pipeline capacity is being added between West Texas and the Gulf Coast with the 500-MMcf/d expansion of the Whistler Pipeline that came online in September and the 550-MMcf/d expansion of the Permian Highway Pipeline (PHP) that started up December 1. Beyond these projects, shippers will likely shift their attention to the startup of the new 2.5-Bcf/d Matterhorn Pipeline and a possible expansion of the Gulf Coast Express (GCX) system for additional Permian gas takeaway in the near term. All that will help feed gas to new LNG export capacity being planned in Corpus, Brownsville and up near Houston. And in Mexico, new gas pipelines are in the works, both to support additional gas-fired power generation and LNG exports south of the border.
Put simply, the natural gas sector in the Permian and Eagle Ford is firing on all cylinders, with production up, gas demand on the rise, gas processing and pipeline infrastructure heavily utilized and requiring expansion, and projects underway to do just that. However, as we said in our recent Let It Grow blog series, midstream companies have been allocating more and more of their cash flow to acquisitions, largely to expand their holdings in key basins like — you guessed it — the Permian and the Eagle Ford. A prime example of this midstream M&A is Kinder Morgan’s announcement last month that it has reached an agreement to purchase NextEra Energy Partners’ STX Midstream gas pipeline assets in South Texas and northeastern Mexico for just over $1.8 billion.
Before we get to the assets Kinder Morgan will be buying — the deal requires clearance under the Hart-Scott-Rodino Antitrust Act (which requires companies to file pre-merger notifications with the Federal Trade Commission and the Antitrust Division of the Justice Department for certain acquisitions) and is expected to close in Q1 2024 — let’s do a quick review of what Kinder already owns in the area.
Figure 1. Kinder Morgan and STX Midstream Gas Pipelines in West Texas, South Texas and Mexico. Source: RBN
Join Backstage Pass to Read Full Article
About the song
“Beautiful Texas” was written by W. Lee “Pappy” O’Daniel and appears as the last song on side two of Willie Nelson’s seventh studio album, Texas in My Soul. Songwriter Pappy O’Daniel was responsible for advertising for the Burris Mill Company in Fort Worth in the 1930s. He formed a country band to back up his songs and vocals he named the Light Crust Doughboys. He hosted a noontime radio broadcast in Fort Worth featuring the band, which for a time included the future western swing band leader and superstar Bob Wills. Soon, everyone in Texas knew who Pappy O’Daniel was, leading him to a successful political career, first as governor and later as senator — after narrowly beating future President Lyndon Baines Johnson in a special election in 1941. Personnel on the record were: Willie Nelson (vocals, guitar), Chet Atkins, Grady Martin, Greg Martin (guitar), Johnny Day (steel guitar), Ray Stevens (vibes, organ), and Johnny Bush (drums).
Texas in My Soul was recorded in early 1968 at RCA Studios in Nashville with Chet Atkins producing. Arkins came up with the idea of doing a concept album of songs about Texas for Nelson’s seventh album. Nelson wanted to use the musicians from his road band on the album, but Atkins insisted on using his own players from his stable of Nashville studio musicians. Three of the songs on the album pay tribute to Texas honky tonk legend Ernest Tubb. Released in April 1968, the album failed to chart. One single, “San Antonio,” was released from the LP and went to #50 on the Billboard Country Singles charts.
Willie Nelson is an American country music singer, songwriter, guitarist, and actor. He made his professional start as a Nashville songwriter in the early 1960s, penning such hits as “Crazy,” “Hello Walls,” and “Funny How Time Slips Away.” Fed up with the Nashville music business, Nelson moved to Austin in the early 1970s and became one of the flag-bearers of the new Outlaw country movement. He has released 100 studio albums, 14 live albums, 51 compilation albums, two soundtrack albums and 130 singles and has sold more than 60 million records worldwide. Nelson has appeared in 36 motion pictures and several television shows. He has won the Gershwin Prize from the Library of Congress, is a member of the Country Music Hall of Fame, and received Kennedy Center Honors in 1998. He continues to record and tour and will begin doing concerts across the U.S. beginning in February 2024.
Comments
EPNG's restart and their partnership with Sempra is another venue from the Permian to Mexico and Arizona. Is there a possibility that California market will pick up?