Energy Transfer LP Joins the Race to Build the Next Permian Gas Pipeline

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Energy Transfer LP Joins the Race to Build the Next Permian Gas Pipeline

Tue, 02/22/2022 - 11:25
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Pipeline contruction side in the Permain Basin (© Shutterstock/G B Hart)
Pipeline contruction side in the Permain Basin (© Shutterstock/G B Hart)

Energy Transfer LP, on Thursday, February 17, joined the race to build the next gas pipeline to transport natural gas from the Permian Basin—the largest shale basin in eastern New Mexico and West Texas, to export hubs located on the Gulf Coast.

"Given the proposed route and our ability to utilize existing assets, we believe we could complete construction of (the Permian) project in two years or less once we have reached FID (final investment decision)," Energy Transfer Co-Chief Executive Thomas Long told analysts on an earnings call late Wednesday.

The pipeline construction race has been triggered by the growing amount of natural gas production in the Permian region and the ever-rising demand of the liquefied natural gas export plants located in the Gulf Coast. Following the spike in demand, many companies, including units of Kinder Morgan Inc (KMI.N) and MPLX LP, are looking to add a new pipeline in the region.

According to an analyst at Mizuho, Energy Transfer seems to be squeezed past Kinder Morgan into a better lead position to build the next Permian Pipeline, considering the company's project would add an estimated transport capacity of 1.5-2.0 billion cubic feet/day. The massive capacity would be transmitted with 260 miles of newly installed pipelines.

Energy Transfer also disclosed it had started building the Gulf Run pipeline in Louisiana to transport natural gas from the Haynesville Shale in Texas, Louisiana, and Arkansas, to the Gulf Coast. The highly anticipated 1.65-bcfd Gulf Run pipeline is supported by a 20-year agreement with QatarEnergy holding 70%, and Exxon Mobil Corp's (XOM.N) with 30% of the $10 billion Golden Pass liquefied natural gas (LNG) export plant under construction in Texas.

Earlier, Energy Transfer said it expected to complete the Gulf Run by the end of 2022. However, Marshall McCrea, Energy Transfer's other co-CEO, told analysts the company was still working on its own LNG export facility at Lake Charles in Louisiana.

"We hope to be able to announce some agreements that we are close to getting signed over the next few years," McCrea said, noting the company was "still a ways from FID, but we are really excited about where that project is going."

In a separate statement, Energy Transfer said it had completed the Mariner East natural gas liquids pipeline in Pennsylvania after many delays.

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