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ADCC Pipeline Gives Cheniere Options in South Texas

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Whistler Pipeline and Cheniere Energy (LNG) are building the ADCC Pipeline in South Texas ahead of an expansion at Cheniere’s Corpus Christi Liquefaction (CCL) terminal. Construction work on the 42-inch pipe should be nearing completion based on a timeline the partners previously laid out.

ADCC Pipeline will run 43 miles from the Agua Dulce hub in South Texas to the CCL facility (see map). In an investor update earlier this year, Cheniere executives said construction was progressing well on the ADCC project and predicted it would begin service in 3Q24, well ahead of the Stage 3 expansion.

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East Daley Analytics tracks the two Cheniere projects in the Houston Ship Channel Supply and Demand Report. The ADCC pipeline is designed to transport up to 1.7 Bcf/d in support of the Stage 3 expansion at Corpus Christi. Cheniere is building seven midscale trains capable of producing over 10 Mtpa of LNG (~1.3 Bcf/d).

In Cheniere’s 1Q24 earnings update in May, executives said the CCL Stage 3 expansion is on track to make first LNG by YE24, and predicted that all seven trains would be brought into service over the 2025-26 period.

The ADCC line will give Cheniere more flexibility to source gas at Corpus Christi, particularly in 2H24 and early 2025 when demand from the Stage 3 expansion is unavailable. The CCL facility is currently only served by the Corpus Christi Pipeline. The new pipe will move Permian gas further downstream via Whistler and provide access to Eagle Ford supply at the Agua Dulce hub.

East Daley does not expect a big shift in basin dynamics given that Whistler Pipeline already runs full at ~2.5 Bcf/d to Agua Dulce. Looking further out, we expect new LNG demand from projects like CCL Stage 3 will create big shifts in the South Texas market later this decade, as we forecast in the Houston Ship Channel Report.

Cheniere is likely to use the new ADCC line to optimize flows to Corpus Christi. Prices at the Waha hub in West Texas are often heavily discounted and traded below zero earlier this spring, so a connection to the Permian market should prove valuable for the large gas buyer.

Intrastate pipelines owned by Kinder Morgan (KMI) and Enterprise Products (EPD) deliver the most gas to CCL, accounting for over half of deliveries to the facility in the latest three months (see figure). Cheniere also moved significant volumes (~600 MMcf/d) on KMI’s Natural Gas Pipeline Company of America (NGPL) system over the latest three months. – Andrew Ware and Alex Gafford Tickers: EPD, LNG, KMI.


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