Houston pipeline operator Kinder Morgan is in the middle of building two projects to move natural gas from the Permian Basin to the Gulf Coast but has confirmed discussions to develop a third.
Kinder Morgan is the lead developer for the Gulf Coast Express Pipeline and the Permian Highway Pipeline — two projects that will move natural gas from the Permian Basin of West Texas and southeastern New Mexico to Corpus Christi and Houston.
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Gulf Coast Express is expected to come into service in October and the Permian Highway project is expected to be in service by October 2020 but Kinder Morgan CEO Steve Kean told investors during a Wednesday afternoon earnings call that the company is in talks to build a third natural gas pipeline in the West Texas shale play.
"The demand to get out of the Permian continues to grow and the desire to be able to unlock the value that's in oil, natural gas liquids and natural gas continues to put pressure on the need for additional takeaway capacity," Kean said.
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The discussions for the company to build a third natural gas pipeline come at a time of record production in the Permian Basin of and other U.S. shale plays. A byproduct of drilling for oil, the Permian Basin produces more than 14.1 billion cubic feet of natural gas per day, U.S. Energy Information Administration data shows.
During the Wednesday afternoon earnings call, Kean told investors that at the current rate of production growth, the Permian Basin would require adding one pipeline per year capable of moving at least 2 billion cubic feet of natural gas per day.
"I don't know that it's going to be at that pace but there is certainly interest in pipeline three," Kean said.
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Developed at a cost of $1.75 billion, Kinder Morgan's Gulf Coast Express Pipeline is a 42-inch pipeline that will move 2 billion cubic feet of natural gas per day from the Waha Hub in the Permian Basin to the Agua Dulce hub near Corpus Christi.
The $2.1 billion Permian Highway Pipeline is a 42-inch pipeline that will move 2 billion cubic feet of natural gas per day from the Waha Hub to the Katy Hub near Houston.
Founded in 1997 and headquartered in Houston, Kinder Morgan has more than 11,000 employees across the United States. The company reported making a $556 million profit on $3.4 billion of revenue during the first quarter.
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