Run for the Roses - An Update on the Race to Add Permian Gas Pipeline Capacity

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.

The U.S. midstream sector is clamoring to build takeaway pipelines for ballooning natural gas production volumes in the Permian Basin and get ahead of any developing takeaway capacity constraints. In the past year, a number of companies have floated plans for moving Permian gas supply east to the Gulf Coast, spurred on by two primary factors — expectations for accelerated supply growth in West Texas; and on the other end, emerging demand from a combination of LNG export facilities being developed on the Texas and Louisiana coasts, and the slew of export pipeline projects targeting growing industrial and gas-fired power generation demand in Mexico. These expansion projects are in a bit of a horse race, not just to beat the clock on potential transportation constraints, but also competing against an increasingly larger field to secure shipper commitments and make it to completion. Among the factors affecting their progress will be their in-service dates and their destination markets. Today, we provide an update on these competing pipeline projects, including the newest entrant, Tellurian’s Permian Global Access Pipeline.

It’s that time of year, folks! March Madness is upon us — time to reboot the office pool and fill out your brackets. And not just for the NCAA Tournament field announced Sunday night, but for the natural gas pipeline projects out of the Permian you think will make it to the Elite Eight or even the Final Four. Matterhorn Express is like the UConn of the bunch as the reigning men’s champ with a chance of repeating — it’s already under construction and slated to come online later this year — and the odds for a Gulf Coast Express expansion look mighty good too, just like record scorer Caitlin Clark and her Iowa Hawkeyes are hoping to build on last year’s run to the women’s championship game. And don’t forget Energy Transfer’s Warrior and Targa’s Apex! Their names alone suggest a fightin’ spirit and a desire to make it to the top. But as we all know from our past bets on the Big Dance, there’s no such thing as a sure thing, especially in the topsy-turvy world of midstream project development, and it’s entirely possible an unknown — the pipeline equivalent of a 16th seed — will be among those cutting down the nets. In today’s RBN blog, we discuss the need for new gas pipeline egress from the Permian and assess the pros and cons of the projects that have a bid.