The expected start-up of the Matterhorn Express Pipeline has been pushed to 4Q24, according to a recent update by the contractor building the project. The revision to the construction schedule would delay by several months new natural gas volumes from the Permian and keep prices under pressure in the basin.
The timeline for the 2.5 Bcf/d Matterhorn project has been a subject of widespread industry speculation. Whitewater Midstream, the lead developer of the project, predicted a 3Q24 start-up date when Matterhorn reached FID in May 2022, but has been tight-lipped since on the project schedule.
With limited new information, market watchers have leaned on Gulf Companies, the engineering, procurement and construction (EPC) contractor building Matterhorn, for sporadic updates. Gulf Companies maintains a list of projects the company is building on its website, and recently had posted a 4Q24 completion target for the 400-mile mainline from Waha to the Katy hub, according to a review by East Daley Analytics. By last Friday (July 26), the language regarding Matterhorn start-up had been removed from the company’s website.
However, we have reviewed a revised construction schedule from Gulf Companies (updated as of mid-June ’24) predicting completion of the Matterhorn project on September 17, 2024. That schedule is no longer publicly available but would be consistent with the 4Q24 in-service target recently indicated on Gulf Companies’ website.
As a result, East Daley is pushing back the start of Matterhorn volumes to October ‘24 in updates to our regional gas models, including the Houston Ship Channel and Permian Basin reports. We had previously forecast linefill beginning in July, based on a previous schedule published by Gulf Companies in September ’22. The just-released Macro Supply and Demand Forecast also assumes a delayed Matterhorn start.
The apparent delay will keep Permian supply growth bottled up for a few more months, a factor supporting steep discounts to basin gas prices. Last week, Waha gas traded around $0.20/MMBtu. The revised schedule will also postpone cash flow for project investors. Along with Whitewater, Matterhorn partners include Devon Energy (DVN), EnLink Midstream (ENLC) and Marathon Petroleum (MPC)
Once flowing, Matterhorn will add more Permian gas to a saturated South Texas market. Pipeline capacity from the Permian Basin to South Texas increases to 12 Bcf/d after Matterhorn comes online, more than triple capacity of just 3.4 Bcf/d in early 2019, according to the Houston Ship Channel report.
As this new Permian supply floods into South Texas, EDA expects to see downward pressure on Houston Ship Channel basis. Demand growth in the region is limited in 2024, so we forecast additional inbound flows from the Permian to displace supply from the Carthage market later this year. We reduce flows from Carthage to Houston by 2-3 Bcf/d from 2024-28 to balance the South Texas market, indicating Houston will trade at a discount to Henry Hub.
See the new Houston Ship Channel Supply and Demand Report for more information. An interactive dashboard is coming soon to Energy Data Studio – an early peek is shown in the figure. – Andrew Ware & Oren Pilant Tickers: DVN, ENLC, MPC.
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