The 1.35 Bcf/d Double E Pipeline has begun delivering Permian Basin gas supply to Kinder Morgan's intrastate Gulf Coast Express project in a bullish sign for West Texas and New Mexico production.
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Deliveries from the recently commissioned Double E Pipeline to Gulf Coast Express began Jan. 25 with flows at the interconnection point averaging just under 40 MMcf/d over the past week, S&P Global Platts Analytics data shows. The new deliveries potentially point to growing demand for capacity on Double E Pipeline and its downstream interconnection to Gulf Coast Express.
Following commercial startup of Double E in November, the project had previously made intrastate deliveries exclusively to Kinder Morgan's Permian Highway Pipeline. In January, flows from Double E to Permian Highway have averaged nearly 150 MMcf/d – an increase of about 20 MMcf/d from the month prior.
Rising utilization on Double E Pipeline and its recent growth in delivered volumes to Kinder Morgan's two intrastate lines comes as upstream activity in the Permian Basin continues to accelerate this year.
Since the start of January, gas production from West Texas and eastern New Mexico has been on a tear, recently approaching a previous record high at a combined 14 Bcf/d as producers hit the accelerator this year.
As of late January, an estimated 304 drilling rigs are currently in operation across the Delaware and Midland basins, just one shy of a late-December high and the most since April 2020, rig data from Enverus shows.
Other upstream indicators are also looking bullish for production.
In the six-month period ending in December, well completions in the Permian averaged about 400 per month – a sustained high unseen since the first quarter of 2021. New well boring also reached a pandemic-era high in December with a total of 315 wells drilled during the month – the most since April 2020, according to data from the US Energy Information Administration.
Oil production has been the primary driver of recent growth. According to a short-term production forecast from the EIA, Permian output could hit a new record high by February at over 5 million b/d.
With recent, stricter regulations on gas flaring and an increased emphasis on environmental, social and governance issues, the continued growth in Permian oil production now depends heavily on the buildout of associated natural gas infrastructure in and around the Permian.
While the completion of long-haul transmission lines like Gulf Coast Express, Permian Highway and Whistler Pipeline, have recently helped to debottleneck west-to-east transmission capacity from the Permian, smaller projects like the Double E Pipeline are now equally important to the basin's near-term growth trajectory.
Double E was designed to receive gas from at least seven processing facilities including six in New Mexico and one in Texas with its strategic location placing it within proximity of some 20 to 25 other processing plants, presumably allowing oil production to continue growing while keeping gas flaring to a minimum.
Earlier this month, another similar in-basin expansion was announced by Whistler Pipeline.
In a press release published late Jan. 26, the operator consortium said that its planned expansion would include the construction of new 36-inch pipe in the Midland Basin, lengthening its existing 85-mile pipeline lateral by another 35 miles into Martin County, Texas. The project is scheduled to enter service by fourth-quarter 2022.