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Whistler Pipeline expansion to add gas processing connectivity, boost utilization


Extends 36-inch Midland lateral into Martin County, Texas

Bullish for oil, gas production growth in Midland Basin

Could lift utilization on Permian-to-Gulf Coast mainline

  • Author
  • J Robinson
  • Editor
  • Richard Rubin
  • Commodity
  • Natural Gas Oil

Expansion of Whistler Pipeline's Midland Basin lateral, recently announced by the owner consortium, promises to give West Texas producers more running room to grow oil and gas production with upgraded connectivity from the region's gas processing plants to the intrastate pipeline.

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Higher utilization rates on Whistler, likely to follow from the upgrade, could potentially shorten the timeline over which Permian Basin-to-Gulf Coast gas transmissions fill existing midstream capacity.

In a press release published late Jan. 26, Whistler Pipeline said that its planned expansion would include the construction of new 36-inch pipe extending roughly 35 miles northwest from its existing line into Martin County, Texas. The new construction will lengthen Whistler's existing 85-mile, Midland Basin lateral with a scheduled in-service date planned for fourth-quarter 2022.

Supply and demand

Whistler Pipeline's plan to expand access to Midland Basin gas processing plants comes as a rebound in global oil demand and a surge in prices over the past year has reignited drilling interest in the Permian.

As of late January, over 300 drilling rigs are currently in operation across the West Texas and New Mexico play as activity there edges back toward pre-pandemic levels, rig data from Enverus shows.

The rebound in activity has fueled spectacular growth Permian oil production, especially over the past 12 months. According to a short-term production forecast from the US Energy Information Administration, output in the Permian could hit new record highs in February at over 5 million b/d.

With recent, stricter regulations on gas flaring and an increased emphasis on environmental, social and governance issues, though, continued growth in Permian oil production will depend on a steady buildout of the basin's gas processing and midstream capacity, which has historically lagged the development of crude infrastructure.

Midstream capacity

Over the past several years, midstream developers have added over 6 Bcf/d in intrastate production takeaway capacity from the Permian including Kinder Morgan's 2 Bcf/d Gulf Coast Express project, its later 2.1 Bcf/d Permian Highway Pipeline and, most recently, the 2 Bcf/d Whistler Pipeline, owned by a consortium of MPLX, WhiteWater, and joint-venture partners Stonepeak and West Texas Gas.

With Whistler's startup to commercial service in August, though, the pipeline could be the Permian Basin's last major production-takeaway project to enter service – potentially until the mid-2020s. In December 2020, Tellurian opted to scrap its proposed 2.3 Bcf/d Permian Global Access Pipeline, leaving just a handful of other proposed Permian-to-Gulf Coast projects on the radar, none of which have reached FID.

As gas transmission volumes on the existing along the West-to-East Texas corridor continue to grow, many market analysts expect that the Permian could become constrained again by mid-decade, putting renewed pressure on gas prices at Permian hubs like Waha.

Smaller expansion projects in the Permian, intended to improve upstream connectivity from gathering networks and processing plants, could accelerate that process. Whistler Pipeline's planned expansion is just the latest of such projects.

In December, startup of the Double E Pipeline added some 1.35 Bcf/d in midstream capacity to the core of the Delaware Basin. The 135-mile pipeline project, a joint-venture developed by Summit Midstream Partners and ExxonMobil, now gives select producers in West Texas and New Mexico portions of the Delaware new downstream connections to major transmission lines including both the Gulf Coast Express and Permian Highway pipelines.