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. Gas producers from the Marcellus/Utica to the Permian are targeting these markets, but there are questions regarding whether the Lone Star State’s existing pipeline infrastructure is sufficient to deliver all that gas to these critically important export markets. Part of the solution will be optimizing the use of Texas’s impressive—but sometimes misunderstood intrastate pipeline networks, particularly the far-reaching systems operated by Enterprise, Energy Transfer and Kinder Morgan. Today, we discuss one part of the solution, an inexpensive but impactful Kinder Morgan project that will enable about 1 Bcf of natural gas from various sources to reach South Texas LNG exporters and Mexico on KM’s intrastate system.
For some time now, three of the more frequent topics in the RBN blogosphere have been rising natural gas production; the potential for liquefied natural gas (LNG) exports from the Gulf Coast and pipeline gas exports to Mexico; and the infrastructure needed to deliver gas to these markets. Most recently, we addressed all three of these topics in Part 1 of “Miles and Miles of Texas,” a two-part Drill Down report on Marcellus/Utica gas being piped to Louisiana and Texas to help meet export demand—and on the challenges inherent in moving all that gas to Gulf Coast liquefaction/LNG export terminals and south of the border into Mexico. (Part 2 of the Drill Down will be published in the next couple of weeks.) In Part 1 we noted that while Texas still produces more natural gas than any other state (20.1 Bcf/d of marketed production as of June 2016, according to the Energy Information Administration, or EIA), the three states in the Marcellus/Utica plays (Pennsylvania, Ohio and West Virginia) together produce even more (21.8 Bcf/d as of June) and because of favorable economics could—and probably will—produce a lot more in the years ahead. We also discussed the fact that, thanks to flow-reversal projects on several major interstate pipelines between Texas/Louisiana and the Northeast, some Marcellus/Utica gas already is being transported to the Gulf Coast, helping meet demand from the first two liquefaction “trains” at Cheniere Energy’s Sabine Pass LNG export facility in southwestern Louisiana; see Way Down Yonder on the Sabine-ahoochee and Commencing Countdown, Engines On, and those volumes will only increase as more liquefaction/LNG export terminals come online and as pipeline-gas exports to Mexico accelerate.
As we will get into in Part 2 of the Drill Down Report, a big question for gas producers, midstream companies, LNG exporters and Mexico’s gas market has been, “How will all that gas be transported across miles and miles of Texas, given that the state’s interstate and intrastate pipelines were developed primarily to move gas north and east to the Houston area and Louisiana, and from there to markets in the Northeast and Midwest?” The answer to that question is complicated—in fact, it will take quite a bit of pipeline-network rejiggering to enable the gas demanded by planned LNG export facilities in Freeport and Corpus Christi, TX (and other possible LNG projects along the Texas Coast) and by Mexico.
A prime example of the outside-the-box thinking that will be needed, though, is Kinder Morgan’s (KM) recently completed Tejas Crossover Pipeline Project (thick blue/black line in Figure 1), a new 52-mile, 36-inch-diameter connector between KM’s two primary intrastate gas pipeline systems in Texas. To keep things simple (we say this in jest), KM gave its two Texas intrastate pipeline systems virtually identical names—sort of like naming two of your sons John and Juan, or two of your daughters Mary and Maria. The KM Tejas system (Tejas being the Native American name for the Texas region—our music-minded readers might recall that it’s also the title of ZZ Top’s fifth album) is represented by the blue lines and mostly runs closer to the coast, while the roughly parallel KM Texas system (red lines) is further inland. (The Tejas/blue-line system generally has higher gas-carrying capacity.) As the title of today’s blog suggests, KM’s new (and aptly named) Tejas Crossover Pipeline (green line) moves gas over (from KM Texas to KM Tejas), under (ground), sideways (toward the coast) and down (toward South Texas and Mexico).