US Partners Commit to Gulf Coast Pipeline
Updates with comments from Apache towards the end of article
Targa Resources and subsidiaries of Kinder Morgan and DCP Midstream announced December 21 a final investment decision for the 1.9bn ft3/day (19.85bn m3/yr) Gulf Coast Express Pipeline Project.
About 85% of the project’s total capacity is subscribed and committed under long-term, binding transportation agreements, while the remaining capacity is expected to be subscribed by early 2018. Committed shippers include DCP Midstream, Targa Resources, Apache and Pioneer Natural Resources.
The $1.7bn Gulf Coast Express project consists of 447 miles of 36- and 42-inch pipe originating at the Waha Hub near Coyanosa, Texas in the Permian Basin and terminating near Agua Dulce, Texas. The 50-mile Midland Lateral will connect with the mainline.
The project is expected to be in-service by October 2019, pending regulatory approvals. Kinder Morgan will build, operate and own a 50% interest in Gulf Coast Express, with DCP Midstream and Targa Resources each holding a 25% equity interest. Apache has an option to purchase a 15% interest from Kinder Morgan, booking 500mn ft3/d (6.45bn m3/yr) of capacity in the planned pipeline.
“We are excited to be moving forward on this much-needed infrastructure project, with construction planned to commence in the first quarter of 2018,” said the president of Kinder Morgan Natural Gas Midstream, Duane Kokinda. “We’re very pleased to have secured the commitments needed for all parties to proceed. The remaining available capacity continues to be marketed to interested shippers and may be offered as part of a binding open season in January 2018.”
The project will provide an outlet for increasing Permian Basin production and additional supply for expanding markets along the Texas Gulf Coast. Apache said the pipe will provide access to domestic industrial and utility users and incremental demand for LNG exports and Mexico markets. "The takeaway capacity we have secured will allow greater flexibility and market optionality for our Permian production, including increasing volumes from our recent discovery at Alpine High," said Brian Freed, Apache's senior vice president, Midstream and Marketing.
Apache announced its Alpine High discovery in September 2016, estimating it then to hold 75 trillion ft³ of rich gas and 3bn bbls of oil in the Barnett and Woodford formations of Texas’s Delaware basin. In 3Q results last month, Apache said it was ramping up the field's production and had already produced an average 13,300 barrels of oil equivalent per day that quarter.