Midstream competition is heating up to meet ballooning expectations for natural gas demand growth in the Southeast. Kinder Morgan (KMI) launched a binding open season for the Mississippi Crossing project (MSX) on Tennessee Gas Pipeline (TGP), and Energy Transfer (ET) has a non-binding open season for the South Mississippi project.
Both projects aim to deliver more gas to the Southeast, where rapid growth is expanding demand for electricity and general economic needs. The MSX project will build a new pipeline to connect the 100, 800 and 500 legs of the TGP system and deliver 1.5 Bcf/d (scalable to 2.0 Bcf/d) from Greenville, MS to new delivery points on TGP and Southern Natural (Sonat) in southern Mississippi, or to Zone 85 on the Transcontinental (Transco) system. KMI projects an in-service of November 1, 2028.
Meanwhile, Energy Transfer Interstate Holdings (ETIH) is holding a non-binding open season through November 1, 2024 to take gas from Cartage and Perryville further into the Southeast, including Florida Gas Transmission’s (FGT) Zone 3 as a primary delivery point. The South Mississippi project is a brown/greenfield hybrid and includes a mix of new large-diameter pipes and compression facilities, as well as leases and possible expansions on existing pipes.
The South Mississippi project is currently scoped for 1.0 Bcf/d but is also scalable to 2.0 Bcf/d. Affiliated pipelines could include FGT, Tiger, Gulf Run, Trunkline, Enable MRT, and EGT. The open season notice left open a range of opportunities, including a potential receipt point as far upstream as Oklahoma. ET estimates a 2Q28 in-service for the expansion.
The latest open seasons follow on Sonat’s South System Expansion 4 (SSE4) and the Transco Southeast Supply Enhancement (SESE). These projects are expected to charge rates at least 200% higher than current firm transport (FT) tariffs for similar paths of travel; East Daley calculates a ~$1.50/Mcf rate on the SSE4 expansion and ~$0.86/Mcf on SESE, and build multiples of 4-5x. The high rates and low multiples signal a window of opportunity for midstream.
As ET and KMI vie for new market, will there be enough demand growth to commercialize both projects? EDA sees potential for both. Utilities in the region have issued bullish demand projections through 2030 via independent resource plans (IRPs) that foresee electricity shortages without new investments. Based on these forecasts, the risks are high that deliveries to the Southeast could fall short in the near term as residential and commercial customers compete with LNG exports for supply.
East Daley tracks gas flows to the Southeast in the Southeast Gulf Supply & Demand Report. We expect gas in the region to trade at a premium in the near term until new pipelines are built, particularly when the Plaquemines Phase 2 LNG project comes online in 4Q26. While the KMI and ET projects will not be online soon enough to mitigate high price volatility in the region, these expansions will play an important role balancing long-term domestic and LNG demand growth.
If Energy Transfer can reach a final investment decision (FID) and achieve similar rates as Williams’ (WMB) SESE on the 1-2 Bcf/d South Mississippi project, that could result in a $250-500MM uplift in the ET Financial Blueprint — a sizeable move for its Interstate segment, where we currently expect EBITDA to be flat at $1.8-1.9B from FY24-28. – Zach Krause, Ajay Bakshani, and Oren Pilant Tickers: ET, KMI, WMB.
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