Gulf Coast Express Pipeline to enter full commercial service

Oct 09, 2019

Harry Weber | SPGlobal | September 24, 2019

Kinder Morgan's Gulf Coast Express pipeline, which is designed to boost Permian Basin gas takeaway capacity by 2 Bcf/d, will be placed into full commercial service Wednesday, the operator said.

The project is among several gas pipelines being developed by the midstream sector targeting the prolific shale basin, which spans West Texas and southeastern New Mexico.

The goal is to provide producers with more outlets for the associated gas they are lifting with oil. Some of the gas will feed liquefaction facilities that are being added or expanded, and also serve cross-border flows to Mexico. Besides Gulf Coast Express, Kinder Morgan, which moves more than one-third of the gas consumed in the US, continues to build its Permian Highway Pipeline, and it is considering a third pipeline, Permian Pass, that would serve the basin.

Kinder Morgan's commercial startup of Gulf Coast Express, announced in a statement Tuesday, will be ahead of schedule, though several days past the operator's most recent estimate. During an energy conference September 4, CEO Steve Kean said the pipeline was taking about 1 Bcf/d of gas and was expected to be in full service around September 20.

The pipeline delivers natural gas from the Waha area in West Texas to Agua Dulce near the Texas Gulf Coast. It is fully subscribed under long-term contracts. Kinder Morgan Texas Pipeline owns a 34% stake in Gulf Coast Express and is the operator of the pipeline. Other equity holders include Altus Midstream, DCP Midstream and an affiliate of Targa Resources.

Permian Highway Pipeline is on target for an October 2020 start-up, Kean said during the recent energy conference.

Waha next-day cash prices for Wednesday's flow date gained 5 cents day-over-day, pushing prices to $1.70/MMBtu following confirmation from Kinder Morgan that the highly awaited Gulf Coast Express would enter full service, less than a week ahead of its original commercial in-service date of October 1.

Although visibility of flows on the intrastate pipeline remains limited, visible flows onto GCX via El Paso Natural Gas Company's bi-directional Waha delivery point -- Rollup Reeves -- pushed near all-time highs over the weekend and have averaged 412 MMcf/d since Saturday, S&P Global Platts Analytics data showed.