A Kinder Morgan Inc. subsidiary and EagleClaw Midstream Ventures LLC have made a final investment decision to push through with the 2 Bcf/d Permian Highway pipeline, after receiving enough shipper agreements to support the project.
The approximately $2 billion project's capacity is almost fully underpinned by firm transportation contracts from EagleClaw and Permian Basin producers such as Apache Corp. and the Exxon Mobil Corp. unit XTO Energy Inc., with the remaining capacity to be awarded shortly, according to a Sept. 5 news release.
Under the joint venture agreement, Kinder Morgan Texas Pipeline LLC is in charge of building and operating the pipeline. Kinder Morgan and EagleClaw would each hold a 50% stake in the pipeline as initial partners, but Apache would have the option to buy a stake. Apache plans to assign the option to a newly formed company called Altus Midstream LP, a pure-play Permian Basin midstream company Apache created with Kayne Anderson Acquisition Corp. Depending on the exercise of ownership options by anchor shippers, Kinder Morgan and EagleClaw would ultimately own between 27% and 50% of the pipeline.
The Permian Highway pipeline is expected to ease takeaway constraints in the Permian. The 430-mile, 42-inch pipeline is designed to carry up to 2 Bcf/d of gas to Texas Gulf Coast markets and would run from the Waha hub to Katy, Texas, with connections to markets in the Gulf Coast and Mexico.
With a final investment decison in place, the project developers intend to start environmental surveys and right-of-way activities in the next months. The project is scheduled to begin service in late 2020.
EagleClaw is a portfolio company of the energy-focused private equity firm Blackstone Energy Partners.