A proposed pipeline project to take 2 Bcf/d of natural gas from the Permian Basin to the Texas Gulf Coast made it through an obstacle when the central Texas city of Kyle approved an agreement to allow developer Kinder Morgan Inc. to build the line within the city's boundaries.
In an Oct. 4 meeting, the Kyle City Council voted to approve a deal with Kinder Morgan affiliates Permian Highway Pipeline LLC and Kinder Morgan Texas Pipeline Inc. that settles a federal lawsuit the pipeline developers had filed against the city. The Kinder Morgan companies sued after the city passed an ordinance this summer that would have restricted construction of the proposed 430-mile, 42-inch-diameter Permian Highway pipeline project.
In exchange for an exemption from the ordinance, Kinder Morgan agreed to pay the city $2.7 million in two separate payments and to cooperate with the city on future infrastructure projects the city might plan along the pipeline path.
The agreement removed one roadblock to the construction of the controversial pipeline project. The pipeline, which would cut through the Texas Hill Country, has garnered staunch opposition from area residents and local governments.
"It's a very important milestone in having a mutually agreeable resolution to a project that is important for Texas and developments that are important to Kyle," Allen Fore, Kinder Morgan vice president of public affairs, said Oct. 7.
Fore said the agreement represents "a significant piece of what we have talked about from the outset: finding a way to make our pipeline compatible with all the areas we're passing through." Kyle stood out from other cities by having the longest section of the pipeline on its route between the Waha Hub in West Texas and the Katy Hub near Houston.
The project faces no other outstanding litigation, Fore said. In June, Kinder Morgan won a court victory when a judge in a Travis County District Court ruled in favor of the pipeline company and the Texas Railroad Commission in a suit brought by the city of Kyle and Hays County, where Kyle is located. The suit had challenged the way the state commission gives private pipeline companies the right to condemn right of way through the process of eminent domain.
With the city of Kyle expected to issue the necessary road-crossing permits within weeks of signing the agreement, the Permian Highway project will have secured "all the permits necessary from a local perspective," Fore said.
The project developers are still working on securing permits from the U.S. Army Corps of Engineers and other federal agencies. Kinder Morgan has also secured about 80% of the right of way from property owners along the pipeline route, Fore said.
The Kinder Morgan companies are building the project in three separate construction spreads. Construction is underway on the western end of the project and expected to begin soon on parts of the eastern segment. The central segment, which comprises the Hill Country, will likely be the last to see construction. Kinder Morgan estimates an in-service date for the pipeline of fall 2020, Fore said.
Jim Magill is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.
