Page 7 - NorthAmOil Week 39
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NorthAmOil PIPELINES & TRANSPORT
NorthAmOil
Gulf Coast Express brought into service ahead of schedule
TEXAS
KINDER Morgan announced last week that the Gulf Coast Express gas pipeline from the Per- mian Basin to the Texas Gulf Coast was entering service slightly ahead of schedule, on September 25.
The pipeline, which is fully subscribed under long-term contracts, will carry 2bn cubic feet (57mn cubic metres) per day from the Waha Hub in West Texas to the Agua Dulce Hub. From there, the gas can be sent to LNG terminals and petrochemical plants along the Gulf Coast, or to Mexico via connecting pipelines.
The $1.75bn pipeline is the first of several gas projects planned for the Permian Basin, which is grappling with a bottleneck of associated gas production. Indeed, out of the leading shale pro- duction regions in the US, the Permian is second only to Appalachia for gas output, despite the fact that drillers in the region are targeting oil. It is also the shale region with the fastest growth in gas production. The US Energy Information Administration (EIA) projects that the Permian will produce 15.1 bcf (429 mcm) per day in October, marking an increase 229mn cubic feet (6.5 mcm) per day on September.
A lack of gas takeaway capacity in the Per- mian has led to flaring rising to record levels, while regional gas prices fell into negative terri- tory, meaning some producers had to pay others to take their gas.
Kinder Morgan operates the Gulf Coast Express with a 34% stake. Other equity hold- ers in the pipeline include Altus Midstream, DCP Midstream and an affiliate of Targa Resources.
One of the pipeline’s customers, Apache, has already said that it has started shipping gas on the Gulf Coast Express. The pipeline’s start-up has been a welcome development for the company after it decided earlier this year to leave some gas in the ground rather than flaring or selling it at an uneconomic price.
The Permian’s gas production is anticipated to continue expanding in the medium term, and more gas pipeline capacity will be needed. Indeed, Kinder Morgan is also currently con- structing the Permian Highway pipeline, which is due to come online in late 2020 with a similar capacity of 2.1 bcf (59 mcm). The company is also considering a third pipeline, Permian Pass, if there is sufficient demand for it.
Meanwhile, MPLX is building the Whistler pipeline, which is scheduled to enter service in 2021, carrying 2.0 bcf. And some in the industry have called for yet more pipelines on top of the ones that are already moving ahead, with Telluri- an’s chairman, Charif Souki, saying recently that at least four more major pipelines are needed on top of those for which a final investment decision (FID) has been reached. Tellurian is one of the companies proposing to develop a major LNG export facility on the Gulf Coast, and is looking to the Permian – among other regions – for feed- stock gas.
Permian flaring reached a record 663 mmcf (19 mcm) per day of gas in the second quarter of 2019, according to Rystad Energy data. Flar- ing in the basin is now anticipated to decline – at least in the short term – following the start-up of Gulf Coast Express.
The Permian’s gas production is anticipated to continue expanding in the medium term, and more gas pipeline capacity will be needed.
Week 39 01•October•2019 w w w . N E W S B A S E . c o m
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