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Kinder Morgan, DCP and Targa team up for 1.92-Bcf/d Permian pipeline project

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Kinder Morgan, DCP and Targa team up for 1.92-Bcf/d Permian pipeline project

A Kinder Morgan Inc. subsidiary, DCP Midstream LP and Targa Resources Corp. will jointly develop a nearly 2 Bcf/d pipeline project that will carry growing gas production from the booming Permian Basin to markets along the Texas Gulf Coast.

The trio on Oct. 4 said they signed a letter of intent to develop the 1.92-Bcf/d Gulf Coast Express natural gas pipeline project, where Kinder Morgan will own 50% of the venture while Targa and DCP each hold 25%. The project is still subject to additional negotiation and definitive agreements, they said.

Targa and DCP, who own some of the premier gathering and processing facilities in the basin, would commit "significant" volumes to the conduit, including gas from Pioneer Natural Resources Company. Pioneer is a joint owner in Targa's WestTX Permian Basin system and one of the largest producers in the unconventional play.

The project would include a lateral into the Midland Basin, which the companies said would consist of 50 miles of 36-inch diameter pipeline and association compression to serve processing plants owned by Targa and Pioneer. Gas would be sourced from multiple locations, including from the Kinder Morgan Texas Pipeline LLC and El Paso Natural Gas pipeline systems, an interconnect with the Trans-Pecos Pipeline, and other connections to intrastate and interstate pipes in the Waha area.

Deliveries of gas into the Agua Dulce area would include points on Kinder Morgan Texas' existing Gulf Coast network, Kinder Morgan-owned intrastate lines, the Valley Crossing pipeline, the NET Mexico header and other systems.

The companies did not specify a cost for the project, but said they expect it to enter commercial service in the second half of 2019.

"The commitments of these parties confirm our premise that combining supply source optionality in the Basin with unparalleled market access on the Agua Dulce end provides an attractive takeaway solution for the parties developing natural resources in the Permian Basin," Duane Kokinda, Kinder Morgan natural has midstream president, said in a statement.