Howard Energy Partners and Kinder Morgan (KMI) recently completed two pipeline projects that add 2 Bcf/d of takeaway from the Eagle Ford, setting the stage for future growth in South Texas.
KMI’s Eagle Ford project includes 67 miles of 42-inch pipeline starting at the existing Kinder Morgan Texas Pipeline (KMTP) compressor station near Freer, TX to the Tejas pipeline system near Sinton, TX.
Howard Energy’s Dos Caminos joint venture completed the Spear project, a 36-inch pipeline that runs 62 miles from Howard’s midstream pipelines in Webb County, TX to the KMTP compressor station near Freer. Howard is the operator and 50% owner of Dos Caminos; KMI in November bought the other 50% interest in Dos Caminos from NextEra Energy Partners (NEP) as part of a larger pipeline package.
KMI and Howard Energy confirmed completion of their respective expansions in early November, a month ahead of schedule. The companies greenlit the projects in July 2023.
The expansions will allow producers in the Eagle Ford to meet new demand from LNG exports. In East Daley Analytics’ Production Scenario Tools available in Energy Data Studio, we forecast Texas Gulf Coast gas production to exit 2023 at ∼8.2 Bcf/d, a Y-o-Y gain of 0.3 Bcf/d. After a relatively flat year in 2024, we expect the growth trend to gain steam in 2025 as new LNG projects start on the Gulf Coast. Along with new regional demand, promising exploration drilling near the Dorado gas discovery in the Austin Chalk formation supports our positive outlook for South Texas.
The KMI and Howard Energy projects will also help push more natural gas volumes north along the Gulf Coast, contributing to volatility at the Agua Dulce and Houston Ship Channel (HSC) hubs.
East Daley discussed the outlook for HSC prices in our latest Dirty Little Secrets report. We expect Ship Channel prices to trade below the Henry Hub on a sustained basis as more natural gas backs up in Texas. In addition to growth from the Eagle Ford, recent pipeline expansions from the Permian Basin have brought more supply to the Texas Gulf Coast. The planned start of the 2.5 Bcf/d Matterhorn Express Pipeline later in 2024 will contribute to this trend.
EDA plans to release a new product in 1Q24 on Eagle Ford supply and demand dynamics - please reach out for more information about the Eagle Ford report. We model the pipeline corridor from South Texas to Louisiana to be highly utilized until new demand comes online from Texas-based LNG projects, including the Corpus Christ Phase 3 expansion, Rio Grande LNG, and Texas LNG. – Maria Paz Urdaneta and Zach Krause Tickers: KMI, NEP.
Dirty Little Secrets is Now Available
Dirty Little Secrets is now available. East Daley held our Dirty Little Secrets annual webinar on Wednesday, December 13. In “Volatility Will Continue Until Morale Improves,” we reviewed the factors likely to drive volatility ahead in oil, natural gas and NGL markets. We review the outlook for these markets and the midstream sector. Review the Dirty Little Secrets webinar here.
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