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Energy Transfer LP Races to Carry Permian Basin Gas to Gulf Coast Hubs
03/01/2022
The Permian Basin's abundance of resources — given that it's the largest shale field in North America —, quickly became the driving force behind Energy Transfer LP's plans for a natural gas pipeline from West Texas and eastern New Mexico to export hubs on the Gulf Coast. The project under consideration would combine new and existing pipelines to serve coastal gas hubs.
A 260-mile new build pipeline would extend eastward from the Midland sub-basin along existing rights-of-way, interconnecting with Energy Transfer’s existing 36-inch pipeline near Fort Worth, Texas.
Given the proposed route and Energy’s ability to utilize existing assets, construction could be completed in two years or less once the parties involved have reached FID (final investment decision). The company's Co-CEO Thomas Long also corroborated this timeline.
A race to build pipelines in the Permian Basin has been triggered due to the increasing quantity of natural gas production under the Permian and the ever-increasing demand for natural gas exports from the Gulf Coast. Various companies, including Kinder Morgan Inc. and MPLX LP, are looking at building new pipelines in the region due to the demand spike.
Energy Transfer likely edged past Kinder Morgan and others into the lead for building the next Permian pipeline since the project strikes as the most economical option for the basin outside of capacity expansions on existing pipelines and could essentially add 1.5-2 Bcf/d of transport capacity with just 260 miles of new pipe.
Additionally, Energy Transfer announced that work had started on the Gulf Run Pipeline, which will connect Louisiana to the rest of the nation and international markets for natural gas transmission. To help meet growing global energy demand, existing assets will also be modified to complete the project.
Approximately 135 miles of the pipeline would run between Westdale and Starks. Enhancing and repurposing some underutilized infrastructure in northern Louisiana will be accomplished by modifying Line CP.
QatarEnergy and Exxon Mobil Corporation both have signed a 20-year agreement under which a $10 billion Golden Pass LNG export plant for this project is going to be built in Texas, and will provide 1.65 billion cubic feet of natural gas daily.
As a result of all those strings being pulled, Gulf Run should be completed by the end of 2022. At least according to Energy Transfer’s Top management statements.
But not all of Energy’s programs have “ongoing” or “underdevelopment” statuses. While management boasted about future prospects, there was also an announcement that the company had finally completed the last phase of its long-delayed Mariner East NGL pipeline expansion in Pennsylvania. A fine boost to the company's trust ratings. After all, actions speak louder than words.
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Evolution Acquires Non-operated Wyoming Natural Gas Interests
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Evolution Petroleum just spend a fortune on Jonah’s Field right after acquiring Hamilton Dome Field in Wyoming. The price of the transaction is $29.4 million. The Houston-based company aims to diversify into natural gas assets, providing access to the western markets through the Opal market hub, with the optionality to flow to the east. That transaction took effect on February 1. We anticipate closing on or about April 1.
$7 Billion Merger of Colgate and Centennial, the 2 Largest Permian Operators
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Despite the circulating rumors concerning Colgate’s attempt to launch an IPO, on May 19 the company decided to combine with Centennial Resource Development Inc. This merger of equals is estimated at $7 billion and will found the biggest pure-play E&P company in the Delaware Basin of the Permian. The transformative combination essentially enlarges companies’ potential and hastens the growth across all financial and operating metrics. According to Centennial CEO Sean Smith, the combined company is anticipated to furnish shareholders with quickened capital return program due to a fixed dividend coupled with a share repurchase plan. Due to a recent report, the merger would increase production 7%, to 145,000 boe/d by the fourth quarter would further ratchet up next year. By third-quarter 2023, the company predicted 160,000 boe/d based on a drilling program of 140 wells per year. Colgate Energy was reported to be getting an IPO last December that sources said would value the company at approximately $4 billion. The combined company will have over 15-years of drilling inventory, assuming its current drilling pace, the companies will produce over $1 billion of free cash flow in 2023 at current strip prices.
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Rangeland Energy has agreed to sell Rangeland Midstream Canada to Kingston Midstream Alberta and remains committed to future Canadian midstream investments. Texas-based Rangeland Energy, supported by financial partner EnCap Flatrock Midstream, has inked a deal to sell its Canadian subsidiary, Rangeland Midstream Canada Ltd., to Calgary's Kingston Midstream Alberta Ltd. for cash.
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The merger between ONEOK and Magellan received approval from Magellan shareholders, securing just 55% of the total votes at Magellan’s meeting on Sept. 21. ONEOK Inc. has successfully concluded the acquisition of Magellan Midstream Partners LP on Sept. 25. The deal will bring together their respective assets and expertise, resulting in a powerful entity boasting an extensive network of approximately 25,000 miles of pipelines primarily focused on transporting liquids.
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Viper Energy's deal, comprised of cash and equity, secures an additional 2,800 net royalty acres in the Midland Basin and 1,800 in the Delaware Basin. Viper Energy Partners LP, a Diamondback Energy Inc. subsidiary, has inked a deal to acquire mineral and royalty interests in the Permian Basin. The deal, valued at around $1 billion, is with Warwick Capital Partners and GRP Energy Capital. Viper was established by Diamondback with the purpose of owning, purchasing, and capitalizing on oil and natural gas assets in North America, specifically targeting mineral and royalty interests.