Permian Basin to get another new pipeline but it won’t be ready for two more years

With experts suggesting a shutdown of some drilling operations in the Permian Basin because of a shortage of pipelines to move oil and gas,  a $2 billion new pipeline project has been announced by three energy firms.

Kinder Morgan Texas Pipeline LLC, EagleClaw Midstream Ventures, LLC and Apache Corporation announced this week intentions to build the Permian Highway Pipeline Project. They say it will provide another outlet for increased natural gas production from the Permian to the growing market areas along the Texas Gulf Coast.

The line will be able to transport 2 billion cubic feet a day of natural gas through a 430-mile long 42-inch pipeline from Waha, Texas to the Gulf Coast. The pipeline should be operational by late 2020.

The three companies say given the level of producer inquiry, they are evaluating the economic and hydraulic feasibility of a 48-inch pipeline with increased transportation capacity.

As for the Permian Highway Pipeline Project, natural gas will be sourced from several locations including existing systems in the Permian Basin with additional interconnections to both intrastate and interstate systems in the Waha area.

The project will hold capacity on KMI’s intrastate pipeline systems in the market area which will enable it to deliver natural gas to the Katy market hub, the Agua Dulce market hub, the Coastal Bend and Kinder Morgan Tejas headers connected to the Freeport LNG export facility, the Cheniere head connected to the Cheniere Corpus Christi LNG export facility and several pipelines along the Texas Gulf Coast.

Kinder Morgan Texas Pipeline and EagleClaw will be the initial partners with 50 percent ownership each. Apache has been jointly developing the project and will have an option to acquire up to 33 percent from the initial partners.