Burgeoning production in the Permian Basin has been top of mind for both producers and midstream developers in the region, recently prompting moves by Kinder Morgan and the Whitewater Midstream consortium to announce brownfield expansion plans for several of their newest intrastate Permian pipelines.
In the most recent announcement, Kinder Morgan June 29 said that it had reached a final investment decision on a 550 MMcf/d expansion of its existing 2.1 Bcf/d Permian Highway Pipeline. The decision caps off a two-month binding open season for the previously announced project. In mid-May, Kinder Morgan announced another binding open season for expanded capacity on its existing 2 Bcf/d Gulf Coast Express Pipeline with the 570 MMcf/d expansion yet to reach FID. The two projects are expected to enter service successively in November 2023 and December 2023, according to the operator.
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A third brownfield project—a 500 MMcf/d expansion to the Whitewater Midstream consortium’s 2 Bcf/d Whistler Pipeline—reached a final investment decision in early May and is expected by the developer to enter service as soon as September 2023.
Combined, the more than 1.6 Bcf/d in additional midstream takeaway capacity from the Permian could offer some uplift to Waha basis prices by late Q4 2023. Currently, the October 2023 contract is priced at a comparatively steep $2.10/MMBtu discount to the Henry Hub, while November 2023 is priced slightly higher at roughly $1.50/MMBtu below the benchmark, Platts data shows.
By autumn 2024, the startup of the Whitewater Midstream consortium’s separately announced Matterhorn Express Project—a 2.5 Bcf/d greenfield Permian production takeaway pipeline expected to enter service in Q3 2024—could help to fuel a sharper rise in Waha’s shoulder-season basis prices. For 2024, Waha’s October and November forward contracts are currently priced at just 70-80 cents below Henry Hub, Platts most recent M2MS forwards assessments show.
