Kinder Morgan Inc. subsidiary KMI Kinder Morgan Texas Pipeline LLC (KMTP), EagleClaw Midstream Ventures LLC, a portfolio company of Blackstone Energy Partners, and Apache Corp. have signed a letter of intent for the development of the proposed Permian Highway Pipeline Project (PHP Project).
The $2-billion PHP Project is designed to transport as much as 2 bcfd of gas through 430 miles of 42-in. pipeline from the Waha, Tex., area to the US Gulf Coast and Mexico. KMI also is evaluating the economic and hydraulic feasibility of a 48-in. pipeline with increased transportation capacity.
Subject to the execution of definitive agreements and receipt of construction approvals, the project is expected to be in service in late 2020, coinciding with growth and scale Permian production as well as Apache’s production forecast for Alpine High, said Brian Freed, Apache’s senior vice-president, midstream and marketing (OGJ Online, Sept. 7, 2016).
Natural gas supply will be sourced into the PHP Project from multiple locations, including the companies’ existing systems in the Permian basin, with additional interconnections to both intrastate and interstate pipeline systems in the Waha area. The PHP Project will hold capacity on KMI’s intrastate pipeline systems in the market area, enabling gas delivery 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 header connected to the Cheniere Corpus Christi LNG export facility, and numerous pipelines along the Texas Gulf Coast.
KMTP and EagleClaw will serve as initial partners with an ownership of 50% each. Apache, who has been jointly developing the proposed project, holds an option to acquire as much as 33% equity from the partners. Apache and EagleClaw will be important shippers on the proposed pipeline, with Apache planning to commit up to 500,000 dekatherms/day. KMTP will build and operate the pipeline.