Pipeline will transport 1.66 MMcf/d of gas from Permian to Gulf Coast
DCP Midstream (ticker: DCP) and Kinder Morgan (ticker: KMI) announced the signing of a letter of intent today, solidifying DCP’s participation in the Gulf Coast Express Pipeline Project.
The Gulf Coast Express is a planned natural gas pipeline that will transport gas from the Permian basin to the Texas Gulf Coast. The 42” pipeline will stretch about 430 miles from Waha, Texas to Agua Dulce Texas. Gulf Coast Express will have a capacity of about 1.7 million dekatherms per day (1.66 MMcf/d). If permitting and other development proceeds as expected, the pipeline is expected to begin service in the second half of 2019.
Currently, Kinder Morgan only has one major pipeline transporting natural gas from the Permian to the Gulf Coast, the Kinder Morgan Texas Pipeline. However, the company does operate extensive pipeline networks at both ends of the route. The El Paso Natural Gas pipeline offers significant gathering capacity in the Permian, and several lines including the Kinder Morgan Texas, Kinder Morgan Tejas, and Tennessee Gas Pipeline extensively serve the Gulf Coast area.
DCP is the largest natural gas processor in the country and operates approximately 1.3 billion cubic feet per day (Bcf/d) of processing capacity in the targeted Permian supply area. The precise volume DCP will contribute has not been released, but their presence in the area makes collaboration advantageous.
“This opportunity presents a welcome competitive alternative that adds diversity to the market and is complementary to our recently announced Sand Hills expansion,” said Wouter van Kempen, chairman, president and CEO of DCP.
Kinder Morgan Midstream President Duane Kokinda also commented on the agreement, stating “We are excited to be partnering with one of the larger natural gas marketers in the Permian Basin area, with DCP Midst ream currently marketing approximately 600 million cubic feet per day of natural gas in that region. We believe DCP’s strong Permian position, when combined with the downstream market connectivity of Kinder Morgan’s Texas Intrastate network, creates a valuable project for both producers and markets.”
Kinder Morgan announced open season for the Gulf Coast Express Pipeline on March 22; bidding will end on April 20.
