SpaceX (SPCX) is emerging as one of the largest new customers for natural gas. The upside is real for midstream: The Elon Musk-backed company is moving into gas transportation to secure fuel for its Starship program, creating infrastructure opportunities near its launch facilities in Florida and Texas.
Starship, SpaceX’s next-generation super-heavy-lift launch system, uses subcooled liquid methane and oxygen. Unlike Falcon 9, which burns rocket-grade kerosene and liquid oxygen, Starship creates a direct link between launch activity and natural gas consumption. SPCX plans to process and liquefy pipeline gas into liquid methane to fuel the rockets.
In Florida, SpaceX subsidiary Coastal Connect Services has proposed a 32.4-mile, 16-inch pipeline connecting Florida Gas Transmission (FGT) to its Cape Canaveral facilities. FGT is jointly owned by Kinder Morgan (KMI) and Energy Transfer (ET).
SPCX currently receives fuel by truck at the Cape Canaveral site, and says a nearby Florida City Gas pipeline cannot meet its volume, delivery and reliability requirements. The Florida Public Service Commission voted Oct. 6 to approve the proposed transportation tariff and firm service agreement, advancing the commercial framework for the project.
In Texas, SpaceX affiliate Lone Star Mineral Development has filed plans with the Railroad Commission of Texas (TRC) for Starpipe, an 8.1-mile, 16-inch gas pipeline serving its Starbase launch site near Brownsville. Starpipe will interconnect with the 145-mile Bay Runner Pipeline under construction in South Texas. Bay Runner is being developed by WhiteWater, Enbridge (ENB) and MPLX. Construction on Starpipe was scheduled to begin in July, according to the TRC filing, and SPCX is targeting an in-service date of Jan. 26, 2027.
SpaceX may also pursue upstream supply to fuel the Starbase facility. Reuters reports that the company has signed more than 100 oil and gas leases with Texas property owners since 2023, signaling interest in producing its own gas.
SPCX’s expansion plans also extend to Louisiana. On Aug. 25, the company announced a $100B investment in Starbase Louisiana, near Pecan Island in Vermilion Parish. At full buildout, the spaceport would include five launch complexes with two pads each, along with onsite propellant production and power generation. Construction is expected to begin in 2027, with the first launch targeted as early as 2029. The proposed campus broadens SpaceX’s potential role in the gas market beyond rocket fueling to supporting an integrated launch facility, although the timing will depend on permitting, construction and launch readiness.
Dedicated pipelines and plans for onsite liquefaction would give SpaceX greater control over its fuel supply, although demand growth will depend on regulatory approvals and actual launch activity.
The Federal Aviation Administration (FAA) has approved an increase to up to 25 annual Starship launches at Starbase in Texas. In Florida, environmental reviews address up to 44 annual launches at Kennedy Space Center’s launch complex, and 76 launches at Cape Canaveral Space Force Station’s Space Launch Complex 37. The Space Launch Complex 37 still requires supplemental FAA review and licensing.
See East Daley Analytics’ Macro Supply & Demand report to learn more. SPCX’s pipeline and liquefaction plans create opportunities for producers and infrastructure operators serving its launch facilities. Pipeline development, liquefaction readiness and launch approvals will determine how quickly that strategy translates into sustained gas deliveries. – Emily Cecchini Tickers: ENB, ET, KMI, MPLX, SPCX.
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How Will Data Centers Affect Development in the Permian Basin?
Data centers are adding significant, non-intermittent demand for natural gas. What could that mean for Permian production and infrastructure?
Join East Daley on Oct. 28 at 10 am MT for a look at how growing gas demand could reshape the region’s natural gas, crude oil and NGL markets.
We’ll cover:
- Natural gas: Permian demand is growing from Gulf Coast pipeline expansions and gas-fired power generation supporting data centers. The basin could very become short gas – a strange paradox for a basin that has been notoriously constrained in the past.
- Crude: As gas demand and egress capacity grow, producers could shift toward gassier windows in the Delaware and Midland basins, producing more associated gas alongside lower oil volumes. We’ll consider how that could ease crude egress pressure, and how much new oil pipeline capacity might be needed beyond potential brownfield expansions.
- NGLs: Higher Waha prices could encourage more ethane rejection, while new very large ethane carriers (VLECs) are expected to be built over the next several years. We’ll explore the tug-of-war between rejection at the wellhead and growing demand at the dock — and what it could mean for ethane production.
Register now before spots fill up to hear East Daley’s analysis of the infrastructure and production shifts shaping the Permian.
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