Kinder Morgan subsidiary Kinder Morgan Texas Pipeline (KMTP), Apache and EagleClaw Midstream Ventures have entered a letter of intent (LoI) to develop the $2bn proposed Permian highway pipeline (PHP) project.
Aiming to deliver natural gas from the Permian Basin to market areas along the Texas Gulf Coast, the project involves the construction of a 430-mile, 42in pipeline to transport up to two billion cubic feet per day (Bcf/d) of natural gas from the Waha area in Texas to the US Gulf Coast and Mexico markets.
Kinder Morgan is also contemplating the development of a 48in pipeline with increased transportation capacity.
Conditional on the execution of definitive agreements and the receipt of construction permits, the partners intend to bring the pipeline online in late 2020.
The project is expected to receive natural gas from multiple locations, including the companies’ existing systems in the Permian Basin.
It will also offer additional interconnections to both intrastate and interstate pipeline systems in the Waha region.
Kinder Morgan Natural Gas Midstream chief commercial officer Sital Mody said: “The PHP project is structured to provide unrivalled market optionality for Permian producers.
“By contracting for space on KMI’s extensive intrastate systems, the project will offer seamless nominations to the Katy and Agua Dulce market hubs; pipeline headers into LNG export facilities on the Texas Gulf Coast; multiple pipelines delivering gas into Mexico, including Valley Crossing, NET Mexico, and KMI’s Border and Monterrey pipelines; and numerous other intrastate and interstate pipelines.
“Additionally, shippers on the project will be able to contract for additional transportation, storage and gas sales options with KMI, whose existing intrastate systems are directly connected to most end users along the Texas Gulf Coast.”
KMTP and EagleClaw will initially jointly own the pipeline project with a 50% interest each, while Apache will have an option to gain an equity of up to 33% in the project.
KMTP will operate and construct the pipeline.
Apache and EagleClaw will have significant capacity of the proposed pipeline reserved to transport their products, with Apache planning to commit up to 500,000 dekatherms a day.
