Energy companies plan to spend the lion’s share of midstream budgets on natural gas this year, investing over $10B to upgrade and expand gas infrastructure in 2024, according to investment data compiled by East Daley Analytics.
Most midstream budgets will target natural gas assets, comprising 67% of planned capital expenditures in 2024, according to East Daley’s CAPEX Dashboard (see ‘CAPEX by Commodity’ figure). Clients can use the CAPEX Dashboard in Energy Data Studio (link here) to review companies’ spending by commodity, asset type or geographic region.
On the natural gas side, capital in the Lower 48 will be evenly split between G&P ($5.0B) and pipeline projects ($5.1B). Most G&P growth capital will be focused on the Permian Basin, attracting an estimated ~$2.6B in 2024. Unsurprisingly, Enterprise Products (EPD) and Targa Resources (TRGP) are the main contributors as the companies build out 2.0 Bcf/d of new processing capacity through YE25. Between new plants and well connects, EDA estimates EPD and TRGP together will spend ~$1.6B, representing 60% of the total G&P spend in the Permian for the year.
TC Energy (TRP), Enbridge (ENB), Williams (WMB) and Kinder Morgan (KMI) dominate gas pipeline expenditures. About 40% of this capital is for modernization projects and regular maintenance capex. We estimate ~$1.0B will be directed toward the Northeast, including the remaining spend on Equitrans’ (ETRN) Mountain Valley Pipeline and WMB’s Regional Energy Access (Phase 2) projects (see ‘CAPEX by Geography’ figure from the CAPEX Dashboard).
Another focus of investment is connecting more gas to LNG demand across the Gulf Coast. We estimate KMI will spend $300MM in FY24 on the Evangeline Pass project on the Tennessee Gas and Southern Natural pipelines. Evangeline Pass will supply 2 Bcf/d to LNG facilities such as Plaquemines. Phase 1 is expected to come online mid-2024, and Phase 2 in mid-2025.
Although natural gas prices have come crashing down in recent weeks, the long-term demand for gas infrastructure has not faltered. As Permian production and LNG demand climb higher, we expect Midstream will continue to add to its current slate of natural gas projects.
Please reach out to learn more about the CAPEX Dashboard in Energy Data Studio. - Ajay Bakshani, CFA Tickers: ENB, EPD, ETRN, KMI, TRGP, TRP, WMB, KMI.
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Join East Daley CCO Justin Carlson on Wednesday, March 10 for a new webinar reviewing market developments from 1Q24. In “Big Picture and Bottom Line – Q1 Market Update,” EDA will look at market trends in crude, gas and NGLs since our Dirty Little Secrets report. Topics include Permian growth or slowdown, the big picture on Louisiana and ripple effects on gas, the LNG pause, and midstream M&A. Join us March 10 for the 1Q23 Market Update.
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