The favorable economics and low nitrogen content of natural gas produced in the Eagle Ford Shale will drive strong production growth in the basin out to 2030 to meet rising demand from LNG terminals, Sital Mody, Kinder Morgan’s natural gas president, told investors Jan. 24.
Data Download Center
Kinder Morgan Texas Air Permits
Midstream Engineer List
Download list of Engineers that work for Midstream Companies in Texas
Natural gas production from the Eagle Ford Shale averaged 5.2 Bcf/d in 2023, according to data from S&P Global Commodity Insights. Wood Mackenzie forecasts it will increase 0.5 Bcf/d between 2023 and 2030, but Kinder Morgan “would project 2.5 Bcf/d of growth” by 2030, Mody said during the company’s investor day.
Based on discussions with its customers, economics in the lean Eagle Ford, particularly Webb County, “probably rival that of the Haynesville,” Mody said. The basin “is going to be a key focus of ours.”
The company has beenexpanding its presence in the Eagle Ford and sees opportunities to blend high-nitrogen gas from the Permian with dry Eagle Ford gas to serve nitrogen-sensitive LNG demand on the Gulf Coast.
“As the Permian gains market share to serve these LNG facilities … it’s going to be a bigger issue,” Mody said. “We do believe that the low nitrogen content that’s in the lean Eagle Ford will be of value as you start to satisfy all the incremental LNG demand.”
Nitrogen content of gas in LNG is typically maintained below 1% to prevent damage to tanks and to maximize the heating value of the transported LNG.
Alternative to nitrogen rejection units
The alternative to blending is to install nitrogen rejection units at LNG facilities, which add capital and operating costs.
“And then you also have the reliability issues associated with the facility,” Mody said. “Our blending service can be priced in a way such that we get incremental value and also remain competitive versus the alternative of putting in an NRU at a facility.”
Industrial gas companies like Chart Industries have expressed skepticism that blending alone can sufficiently reduce the nitrogen content of Permian gas heading into Gulf Coast LNG terminals.
“The way that the pipeline infrastructure in the US is configured … it isn’t readily apparent that blending to lower levels of inerts is possible or practical,” John Walsh, Chart’s vice president of investor relations, told S&P Global Jan. 17. “The end result is LNG liquefaction operators will continue to need to manage inerts and nitrogen.”
Kinder may seek to add two greenfield pipelines to the Permian this decade as it expects an increase of 7 Bcf/d to production in the Permian by 2030.
The company is in discussion for a pipe that could go in service early 2026 or late 2027, Mody said.
“There’s also probably another pipe needed, maybe a couple of years later,” he said.
This greenfield capacity would add to the 2.5 Bcf/d Matterhorn Express, being developed by Whitewater Midstream, which is due in service later this year.
Gas storage
Executives also took up the topic of natural gas storage and relayed how Kinder looks at increasing its share, which accounts for around 15% of US capacity.
Increasing penetration of renewable resources and the growth of intermittent demand for gas along the Gulf Coast has fueled renewed interest among storage owners and other market participants to expand capacity, S&P Global previously reported.
Growth of natural gas liquefaction and the need among customers for firm supply, as well as space to offload gas in the event of disruptions to loading LNG cargoes, are also major factors behind storage capacity growth.
Mody emphasized that LNG customers “need injection capabilities” as he spoke about opportunities for Kinder Morgan’s 702-Bcf storage portfolio beyond serving local distribution companies under tariff-governed terms.
“Historically, we’ve been focused on deliverability, and so what we’re doing right now is trying to figure out how to price our service such that we can satisfy the LNG customer, satisfy the traditional LNG customer, and ensure that we improve the value realized for our existing asset [along the Gulf].”
Oil & Gas Company Lists Download Oil & Gas Account Lists by Play/Basin
