Whatever It Takes - Whistler Pipeline Project Goes the Extra Mile to Link Permian and Gulf Coast Markets

Constructing greenfield pipelines is never easy — just ask any midstream developer you know — but building them across the breadth of Texas comes with its own unique challenges. There’s distance, for starters, and today’s massive associated gas growth in the Permian Basin is occurring more than 400 miles from the closest demand along the Gulf Coast. That makes the pipelines relatively expensive at somewhere near $2 billion a copy. Integrating Permian supply with Gulf Coast demand also requires a big network of pipelines along the coast, as the demand is spread out from Louisiana to Mexico. Few midstream companies have such a network. Kinder Morgan does, one reason why, in our view, the Gulf Coast Express project was the first — and to-date the only — greenfield project from the Permian to proceed with a final investment decision. In the race to be the next Permian natural gas relief valve pipeline, the same hurdles will have to be overcome. On Friday, news came that a group of four companies is planning the Whistler Pipeline, and a closer look at the project reveals it may be capable of meeting the challenges needed to make it a serious player in the Permian pipeline race. Today, we look at the details of the latest Permian natural gas pipeline project.

For the blog writers here at RBN, natural gas pipeline news in the Permian Basin has certainly been the “gift that keeps on giving the whole year.” We’ve piled up Permian gas blogs higher than that stack of dog food bags Cousin Eddie, owner of the previous sentence’s quote, brings home in the classic holiday movie, Christmas Vacation. Only a few weeks ago we were here discussing what was then the latest infrastructure development in the basin in P.H.P., Dynamite!, a blog focusing on Kinder Morgan and EagleClaw Midstream’s proposed Permian Highway Pipeline. A few days before that, in Trouble Every Day, we began a series that outlined potential options for Permian natural gas should pipeline capacity out of the basin fill up before the first new pipeline — Kinder Morgan’s Gulf Coast Express (GCX) — starts up in late 2019. We also discussed all the other pipeline projects under development in our latest Drill Down report, Hell In Texas. Maybe we wrote that report too soon, because the recently announced Whistler Pipeline may prove to be one of the most interesting developments in the Permian gas story yet.

Description of the Whistler Pipeline Project

First, some details on the project. Whistler was announced on Friday in a joint press release issued by the four companies involved in its development: Targa Resources, NextEra Energy Resources, WhiteWater Midstream and MarkWest/MPLX. Those companies have executed a letter of intent and associated term sheets for the joint development of Whistler, which will provide an outlet for increased natural gas production from the Permian Basin to growing markets along the Texas Gulf Coast. As shown in Figure 1, the core of the Whistler Pipeline consists of approximately 450 miles of 42-inch-diameter pipeline (dashed green and black line) from the Waha Hub in the Permian Basin to the NextEra Agua Dulce market hub in South Texas. There, the 2.0-Bcf/d pipeline would have access to a network of pipelines, including the NET Mexico Pipeline (solid magenta line) via the NET Mexico header and Enbridge’s Valley Crossing Pipeline (dashed yellow and black line) via the Nueces Header. While the 42-inch part of Whistler ends in Agua Dulce, a 30-inch section, named the Whistler Extension (dashed purple line), would extend northeast along the Texas Gulf Coast for approximately 170 miles, terminating in Wharton County. We have also added the Coastal Bend Header to the map (dashed aqua and black line) as a frame of reference for the other infrastructure in Wharton County.