Over, Under, Sideways, Down - Enterprise's Plan to Help Move Gas to Texas Export Markets

Intrastate natural gas pipelines in Texas reach far and wide, and can transport extraordinary volumes of gas. The problem is, the traditional supply/demand dynamics that spurred the development of all that pipe decades ago are being up-ended by burgeoning Marcellus/Utica production headed to the Gulf Coast and the demand-pull of gas to planned LNG export terminals along the Texas coast and to Mexico. Lone Star State pipelines that for years have flowed north and east to the Houston Ship Channel and beyond now must flow south and west. Today, we continue our review of efforts to rework and expand key elements of Texas’s intrastate gas pipeline network to meet growing export needs, this time with a look at plans by Enterprise Products Partners.

As we said in Part 1, planned liquefaction/LNG export facilities along the South Texas coast and growing demand from Mexico’s electric power sector together will require several billion cubic feet/day of additional U.S. natural gas over the next three to five years. These export markets are being targeted by gas producers across the country, from the Marcellus/Utica to the Permian Basin, but a lingering question is whether Texas’s existing pipeline infrastructure is sufficient to deliver all that gas. Reversed interstate pipelines can move increasing volumes of gas from Pennsylvania, Ohio and West Virginia to Louisiana and into Texas, but that’s not enough. A critically important part of the solution will be optimizing the use of Texas’s vast network of intrastate pipelines, many of which are operated by three major players in the market: Enterprise, Kinder Morgan and Energy Transfer Partners. Last time we looked at Kinder Morgan’s recently completed Tejas Crossover Pipeline Project, a 52-mile, 36-inch-diameter connector between the company’s two primary intrastate systems that will enable up to 1 Bcf/d of gas to flow south from the Katy, TX gas hub (about 30 miles west of downtown Houston) and Kinder Morgan’s 1 Bcf/d Houston Central Complex gas processing facility in Colorado County, TX to the Agua Dulce hub in Nueces County, TX (near Corpus Christi), the starting-off point for two major pipelines to Mexico: NET Midstream’s nearly two-year-old 2.1-Bcf/d NET Mexico Pipeline to the U.S.-Mexico border (near Rio Grande City, TX in Starr County; red line in Figure 1) for Pemex Gas & Petroquimica Basica (Mexico’s state-owned gas company) and others; and Spectra Energy’s planned Valley Crossing Pipeline (purple dashed line), which beginning in late 2018 is planned to transport up to 2.6 Bcf/d from Nueces County to Brownsville (TX). From Brownsville, gas will move through the planned 2.6-Bcf/d Sur de Texas-Tuxpan undersea pipeline from Brownsville to the Mexican port city of Tuxpan.

NATGAS Permian Report

The NATGAS Permian Report is a weekly natural gas fundamentals analysis focusing entirely on the key market drivers within the Permian basin. The report contains details and forecasts around natural gas production, demand, and pricing. It offers a summary of pipeline outflows and capacities from the Permian to neighboring regions, outlining the key shifts in flows to the West, MidCon, and Texas intrastate markets. 
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Like Kinder Morgan and its Tejas Crossover project, Enterprise’s plan for increasing the capacity of its Texas intrastate system’s ability to move gas to export markets seeks to maximize the use of existing pipes and minimize the need for new investment. The aim of Enterprise’s effort––much of which is still in its planning stages––is to allow increasing volumes of gas from the Eagle Ford and the Katy hub to flow to the Agua Dulce hub. The company’s Texas intrastate network has three key elements: the 6,809-mile Enterprise Texas pipeline system (blue lines in Figure 1 map), the 629-mile Channel pipeline system (green line) and the South Texas and Waha gathering systems (red lines). The network (which also includes 12.9 Bcf of gas storage capacity in underground salt domes at Enterprise’s Wilson facility in Wharton County, TX, about 70 miles southwest of Houston; dark green rectangle) was developed primarily to handle gas from the Permian, Eagle Ford, and Barnett Shale regions to serve industrial customers along the Houston Ship Channel area as well as markets in Corpus Christi, San Antonio/Austin, Beaumont/Orange and Houston.  Much of that gas supply is residue gas (outlet of processing plants) sourced from Enterprise’s 2.5 Bcf/d of processing capacity in South Texas.

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