Kinder Morgan, EagleClaw make FID on $2bn Permian Highway Pipeline Project

Kinder Morgan and EagleClaw Midstream Ventures have reached a final investment decision to move ahead with the near $2 billion Permian Highway Pipeline Project, a 430-mile long natural gas pipeline that will bring natural gas from the Permian Basin to the emerging market areas along the Texas Gulf Coast.

Through its subsidiary Kinder Morgan Texas Pipeline, Kinder Morgan alongside EagleClaw, a portfolio company of Blackstone Energy Partners, has announced the final investment decision after executing joint venture agreements and getting enough firm transportation agreements with shippers.

The 42-inch Permian Highway Pipeline Project will be designed to transport up to 2.0 billion cubic feet per day (Bcf/d) of natural gas. Owned 50:50 initially by Kinder Morgan Texas Pipeline and EagleClaw, the new natural gas pipeline is aimed to be commissioned in late 2020, subject to timely receipt of the necessary regulatory approvals.

Kinder Morgan, EagleClaw announce FID on $2bn Permian Highway Pipeline Project in Texas. Photo courtesy of outgunned21 at Freeimages.com.

Kinder Morgan said that under long-term, binding transportation agreements, almost all available pipeline capacity on the Permian Highway Pipeline Project has been subscribed and committed. The rest of the natural gas pipeline capacity is likely to be awarded soon.

EagleClaw, Apache Corporation and ExxonMobil’s XTO Energy are some of the shippers who have come on board so far.

Commenting on the final investment decision on the Permian Highway Pipeline Project, Sital Mody – President of Kinder Morgan Natural Gas Midstream, said: “We are very pleased to have reached this important milestone and to have secured the commitments required for all parties to proceed.

“With a route identified and the project nearly fully subscribed, we expect to begin stakeholder outreach, environmental surveys and right-of-way activities in the coming months.”

Apache holds an option to buy equity in the new natural gas pipeline in Texas from the initial partners. The ExxonMobil affiliate revealed its plans to assign the option to Altus Midstream, a new company to be owned by Apache and Kayne Anderson Acquisition.

The ultimate ownership stakes in the natural gas pipeline project of Kinder Morgan and EagleClaw could vary between nearly 27% and 50%, based on the outcome of ownership options held by anchor shippers.

The Permian Highway Pipeline Project, which will be laid from Waha to Katy in Texas, with connections to the US Gulf Coast and Mexico markets, will be constructed and operated by the Kinder Morgan subsidiary.

Jamie Welch – President and Chief Financial Officer of EagleClaw, commenting on the final investment decision on the Permian Highway Pipeline Project, said:  “With the continued growth in drilling activity in the Permian Basin, this project will help to provide key infrastructure for producers to move natural gas to the best premium markets along the Gulf Coast and South Texas.”