Released January 05, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas) has announced that its Permian Highway natural gas pipeline has begun commercial operations. The pipeline runs from West Texas to the Katy, Texas, area near Houston, with connections to U.S. Gulf Coast and Mexico markets.
The 2.1 billion-cubic-foot-per-day (Bcf/d) pipeline had been carrying volumes of natural gas for several weeks prior to commercial startup on January 1, Kinder Morgan said. The project represents a victory for Kinder Morgan as it not only overcame opposition from environmental groups but was completed during a global pandemic. For more information, see Industrial Info's project report. Although Kinder Morgan in December announced a reduction in 2021 capital expenditures by $680 million from 2020's original estimate of $2.4 billion, the company continues to develop other projects, although lower oil and gas demand resulting from the COVID-19 pandemic is forcing the company to take a hard look at whether to proceed with them.
Kinder Morgan seems intent on targeting the natural gas market in the Permian Basin. As oil production in the formation has risen, so has associated natural gas production. The Gulf Coast Express natural gas pipeline, which was completed in 2019, provided much-needed takeaway capacity in the region. Click here for project reports.
However, oil production from U.S. shale formations is in decline, including in the Permian. In its latest Drilling Productivity Report, the U.S. Energy Information Administration (EIA) predicted oil production in the Permian would decline from 4.24 million barrels per day (BBL/d) in December 2020 to 4.196 million BBL/d in January 2021, a decline of 44,000 BBL/d. With this comes the decline in associated natural gas.
Among the projects that Kinder Morgan is evaluating is the Permian Pass natural gas pipeline, which would carry up to 2 billion cubic feet of gas per day from the Permian to the Texas Gulf Coast. Even before the pandemic and its effects reached full tilt in the U.S., Kinder Morgan was expressing doubts about the proposed $2 billion project because of a lack of customers, due in part to low natural gas prices. According to Reuters, in early March 2020, Kinder Morgan Chief Strategy Officer Dax Sanders told an energy conference in Colorado, "We don't have anybody signed up yet. ... If it comes together, it does. If it doesn't, it doesn't." Sanders said that then-current market conditions suggested Permian Pass would be needed around 2023. For more information, see Industrial Info's project report.
Other projects that have been placed on the backburner include a proposed liquefied natural gas (LNG) project in Pascagoula, Mississippi, which received approval from the U.S. Federal Energy Regulatory Commission (FERC) in July 2019. Only one North American LNG plant received a positive financial investment decision in 2020: Sempra Energy's (NYSE:SRE) (San Diego, California) Costa Azul plant in Mexico (see project report).
Kinder Morgan's Gulf LNG plant in Pascagoula would have two trains to produce more than 10 million tons per year of LNG. The company was giving low priority to the project before the pandemic, and while long-term global LNG demand is expected to rise, this may not be soon enough for Kinder Morgan to get a start on this project in the near future. For more information, see Industrial Info's project reports on the production facility and Train 2 expansion.
An oil pipeline project related to another LNG project may fare better: Kinder Morgan's Ruby Pipeline in the western U.S. Pembina Pipeline Corporation (NYSE:PBA) (Calgary, Alberta) is the sole owner of the proposed Jordan Cove LNG project in Coos Bay, Oregon, but in December, the company said it would prioritize other projects over Jordan Cove, which has seen a slew of permitting issues and headwinds. This leaves Kinder Morgan's Ruby Pipeline, an existing pipeline that was originally planned to provide 1.5 Bcf/d natural gas to the facility. On the table is a proposal to convert the pipeline to carry crude oil from Wyoming to Oregon. While the project remains in the early planning stages, capital outlay would be minimal compared with grassroot pipeline projects and the project duration would be much shorter, possibly less than a year. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The 2.1 billion-cubic-foot-per-day (Bcf/d) pipeline had been carrying volumes of natural gas for several weeks prior to commercial startup on January 1, Kinder Morgan said. The project represents a victory for Kinder Morgan as it not only overcame opposition from environmental groups but was completed during a global pandemic. For more information, see Industrial Info's project report. Although Kinder Morgan in December announced a reduction in 2021 capital expenditures by $680 million from 2020's original estimate of $2.4 billion, the company continues to develop other projects, although lower oil and gas demand resulting from the COVID-19 pandemic is forcing the company to take a hard look at whether to proceed with them.
Kinder Morgan seems intent on targeting the natural gas market in the Permian Basin. As oil production in the formation has risen, so has associated natural gas production. The Gulf Coast Express natural gas pipeline, which was completed in 2019, provided much-needed takeaway capacity in the region. Click here for project reports.
However, oil production from U.S. shale formations is in decline, including in the Permian. In its latest Drilling Productivity Report, the U.S. Energy Information Administration (EIA) predicted oil production in the Permian would decline from 4.24 million barrels per day (BBL/d) in December 2020 to 4.196 million BBL/d in January 2021, a decline of 44,000 BBL/d. With this comes the decline in associated natural gas.
Among the projects that Kinder Morgan is evaluating is the Permian Pass natural gas pipeline, which would carry up to 2 billion cubic feet of gas per day from the Permian to the Texas Gulf Coast. Even before the pandemic and its effects reached full tilt in the U.S., Kinder Morgan was expressing doubts about the proposed $2 billion project because of a lack of customers, due in part to low natural gas prices. According to Reuters, in early March 2020, Kinder Morgan Chief Strategy Officer Dax Sanders told an energy conference in Colorado, "We don't have anybody signed up yet. ... If it comes together, it does. If it doesn't, it doesn't." Sanders said that then-current market conditions suggested Permian Pass would be needed around 2023. For more information, see Industrial Info's project report.
Other projects that have been placed on the backburner include a proposed liquefied natural gas (LNG) project in Pascagoula, Mississippi, which received approval from the U.S. Federal Energy Regulatory Commission (FERC) in July 2019. Only one North American LNG plant received a positive financial investment decision in 2020: Sempra Energy's (NYSE:SRE) (San Diego, California) Costa Azul plant in Mexico (see project report).
Kinder Morgan's Gulf LNG plant in Pascagoula would have two trains to produce more than 10 million tons per year of LNG. The company was giving low priority to the project before the pandemic, and while long-term global LNG demand is expected to rise, this may not be soon enough for Kinder Morgan to get a start on this project in the near future. For more information, see Industrial Info's project reports on the production facility and Train 2 expansion.
An oil pipeline project related to another LNG project may fare better: Kinder Morgan's Ruby Pipeline in the western U.S. Pembina Pipeline Corporation (NYSE:PBA) (Calgary, Alberta) is the sole owner of the proposed Jordan Cove LNG project in Coos Bay, Oregon, but in December, the company said it would prioritize other projects over Jordan Cove, which has seen a slew of permitting issues and headwinds. This leaves Kinder Morgan's Ruby Pipeline, an existing pipeline that was originally planned to provide 1.5 Bcf/d natural gas to the facility. On the table is a proposal to convert the pipeline to carry crude oil from Wyoming to Oregon. While the project remains in the early planning stages, capital outlay would be minimal compared with grassroot pipeline projects and the project duration would be much shorter, possibly less than a year. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
