(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor – Kinder Morgan has recently announced that it has completed an expansion project to increase the capacity of its Permian Highway natural gas pipeline by 550 mcf/d to a total capacity of 2.65 bcf/d. This follows the September completion of a 500 mcf/d expansion project to the Whistler pipeline, bringing its capacity to 2.5 bcf/d. The completion of the Matterhorn Express pipeline project in 2H24 will further increase Permian gas takeaway capacity by ~2.5 bcf/d. All three projects are designed to transport Permian gas toward the Gulf Coast. In an interview with S&P Global, Kinder Morgan CEO Kimberly Dang expressed her outlook on Permian gas takeaway capacity and said, “The market has added over 1 bcf/d of capacity in the fourth quarter, and then I think Matterhorn is coming…you’ve got capacity coming into the market now. That’s why we believe it’s the back half of the decade before you see the need for a brand-new greenfield pipe [in the Permian].” In light of this comment, it is important to review our position in the forcast issue last month where we mentioned LNG export facility construction would constrain existing pipeline infrastructure. Need for large diameter gas delivery lines from gas trading hubs, like Agua Dulce & Katy hubs in Texas and Henry hub in Louisianna remain unchanged in our forecast. Michigan regulators have approved Enbridge’s application to build a tunnel under the Great Lakes to accommodate the replacement of 4 miles of its 70-year-old Line 5 oil pipeline, which runs through the Straits of Mackinac between Lakes Michigan and Huron. Enbridge has cited pipeline failure and concerns of a potential oil spill as driving factors behind the $750 million pipeline replacement. Construction is not expected to start before 2026, pending federal permits from the US Army Corps of Engineers. Equitrans Midstream is exploring an asset sale, including its 48.1% stake in the Mountain Valley Pipeline (MVP), according to Bloomberg News. The company is slated to operate the pipeline after its scheduled Q1 2024 commissioning. If the company proceeds with the sale, interest is expected to be high. Next Era Energy Resources and Con Edison Transmission are among the other companies already invested in the project. Import Supply – October line pipe imports totaled 97,858 tons, coming in right on the license tally reported last month. November 2023 import licenses fell from the linear estimate to 111,003 tons. The December linear forecast, 11 of 20 days summed, is up again to 172,583 tons, again unlikely. The top line pipe import item for October was CARBON ERW, OVER 4 ½” OD, NOT OVER 16” OD, at 35,671 tons at a price of $936/ton, down $80/ton from November.
Preston Pipe Report – December 2023
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