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Kinder Morgan touts Permian connections

20 Apr 2017 20:51 (+01:00 GMT)
Kinder Morgan touts Permian connections

Houston, 20 April (Argus) — Kinder Morgan this week said its connectivity gives it an advantage over competitors in bringing natural gas from Texas' Permian basin to the Gulf coast.

Kinder Morgan last week announced the Gulf Coast Express expansion, which would flow 1.7 Bcf/d (48mn m³/d) of gas from the Waha hub in west Texas to Agua Dulce, near Corpus Christi. The company is developing the project jointly with DCP Midstream.

Kinder Morgan chief executive Steve Kean addressed two other projects that have been announced recently along the same path, saying that Gulf Coast Express has an edge over them.

"We touch all the major markets, including all the big growing markets," he said during an earnings call yesterday. "If you are in Agua Dulce and are connected to our system, you can go to Mexico or Corpus Christi or Houston — then you have really got something."

Kean said DCP Midstream fills any gaps in the upstream portion of the project for Kinder Morgan, and that there are others the company could coordinate with in that area as well.

Kinder Morgan earlier this month announced an open season for its El Paso Natural Gas pipeline system in west Texas. Depending on the level of interest in added capacity on that line, an expansion there could boost more gas into Waha in order to flow into Gulf Coast Express. The company is seeking commitments for 150mn cf/d of existing capacity but said it will consider expanding the line by about 900mn cf/d if there is enough interest.

Kean said that expansion would be relatively easy to undertake, saying that the first 150mn cf/d is available "without moving a muscle."

Expanding the El Paso line further would require relatively little capital spending, with about half of the increase possible mainly through meter modifications. The remainder could be created with increased compression and limited new pipeline buildout.

"That is a little bit pricier, but not much," he said.

Flows on Kinder Morgan pipelines in the first quarter increased by only 1pc from a year earlier to 29 Bcf/d amid weak wintertime demand, with power demand down on the year. The increase was driven by higher throughput on Tennessee Gas pipeline, higher deliveries to the Sabine Pass LNG facility and deliveries to South Texas to meet demand from Mexico. Flows to Mexico were up by 16pc on the year, averaging at 2.8 Bcf/d.