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Permian Highway Pipeline, Texas

  • Project Type

    Natural gas pipeline

  • Location

    Texas, US

  • Owners

    Kinder Morgan Texas Pipeline, EagleClaw Midstream, and Apache

  • Capacity

    Two billion cubic feet a day

  • Investment

    $2bn

  • Commissioning

    2020

Kinder Morgan Texas Pipeline (KMTP) is developing a new natural gas pipeline named Permian Highway Pipeline in Texas, US, in collaboration with EagleClaw Midstream and Apache.

KMTP is a subsidiary of Kinder Morgan, while EagleClaw Midstream is a portfolio company of Blackstone Energy Partners.

Estimated to cost $2bn, the Permian Highway Pipeline aims to increase Permian Basin’s gas exports to the US Gulf Coast and Mexico markets.

The pipeline will be connected to various receipt points at Waha Hub, Western Texas, and will deliver natural gas at various points in areas such as Katy, Texas Gulf Coast, and South Texas.

The Permian Highway Pipeline will be able to transport up to two billion cubic feet of natural gas a day, once operational in 2020.

Permian Highway Pipeline development details

KMTP, EagleClaw and Apache signed a letter of intent (LoI) for the joint development of Permian Highway Pipeline project in June 2018. KMTP and EagleClaw will hold an initial interest of 50% each in the project.

Apache has an option to acquire up to 33% stake in the project from either KMTP or EagleClaw, though a new entity named Altus Midstream, which was established by Apache and Kayne Anderson Acquisition in August 2018.

KMTP and EagleClaw Midstream announced the final investment decision (FID) for the project in September 2018.

Pipeline design and route details

The pipeline will have a length of approximately 692km (430mi) and diameter of 42in. The economic and hydraulic feasibility of a 48in diameter pipeline is also, however, being evaluated by Kinder Morgan.

The proposed pipeline will deliver natural gas from Permian Basin to the Katy and the Agua Dulce market hubs. It will also transport gas to various headers such as the Coastal Bend and Kinder Morgan Tejas headers connected to the Freeport LNG export facility and the Cheniere header connected to the Cheniere Corpus Christi LNG export facility.

The pipeline will also be inter-connected to various existing natural gas pipelines along the Texas Gulf Coast, as well as multiple pipelines that deliver natural gas to Mexico, such as Valley Crossing, NET Mexico, Kinder Morgan’s Border, and Monterrey pipeline.

Gas supply for Permian Highway Pipeline

The natural gas for the Permian Highway Pipeline will be sourced from various gas distribution facilities of Kinder Morgan, EagleClaw, Apache and ExxonMobil, in Permian Basin.

The LoI signed between KMTP, EagleClaw and Apache covers 500,000 dekatherms a day of the pipelines’ total capacity.

In August 2018, XTO Energy, a subsidiary of ExxonMobil signed a LoI for  450,000 dekatherms a day.

Key players involved

KMTP will be responsible for the construction and operation of the Permian Highway Pipeline.

Law and government relations firm Bracewell provided the corporate and security services to KMTP for the project.

Vinson & Elkins provided advisory services to EagleClaw Midstream for the execution of agreements for the project.

Energy infrastructure in the Permian Basin

The Permian Basin assets produced approximately 10.4 billion cubic feet of natural gas and 3.3 million barrels of crude oil a day in June 2018, according to the latest Drilling Productivity Report of the US Energy Information Administration (EIA).

Two new pipelines, Comanche Trail and Trans-Pecos, with a combined capacity of 2.6 billion cubic feet of natural gas were constructed to export the natural gas from Permian Basin in 2017. The North Texas Expansion Pipeline and Old Ocean Pipeline to be commissioned in 2018 will increase the Permian Basin’s export capacity by 0.5 billion cubic feet of natural gas.

Apart from the Permian Highway Pipeline, other under-construction pipelines that will connect Permian Basin to the Gulf Coast include the Gulf Coast Express Pipeline with a capacity of two billion cubic feet a day, the Permian to Katy Pipeline with a capacity from 1.7 to 2.3 billion cubic feet a day, and the Pecos Trail Pipeline with a capacity of 1.9 billion cubic feet a day.

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