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.
Propane Supply and Demand Report and Data Set: Coming Soon
Propane Supply and Demand is a Data File & Report that includes historical and forecasted supply and demand components for propane including gas plant propane production, refinery propane production, domestic demand from steam crackers and other consumption, plus propane (LPG) exports. Learn more about the Propane Supply and Demand Report and Data Set.
Sign Up for the Crude Oil Edge
East Daley’s Crude Oil Edge provides weekly updates on the US crude oil market including supply and demand fundamentals, basin-level views, and analysis of market constraints and infrastructure proposals. We explore sub-basin dynamics and provide market insights on crude oil flows, production growth, and import and export characteristics. Sign up now for the Crude Oil Edge.
Energy Data Studio
East Daley Analytics has launched Energy Data Studio, a platform for our industry-leading midstream data and commodity production forecasts. All clients have access to the new client portal. If you have not yet logged in, please fill out the form to request a registration email be resent.
Energy Data Studio leverages our G&P data set for insights into midstream assets across every major oil and gas basin in North America. Users can navigate detailed visual dashboards by region, pipeline, or individual asset to understand crude oil, natural gas and NGL supply at the most granular level.
Energy Data Studio is available through data downloads from the visual interface, in Excel files, or as a direct feed delivered into subscribers’ workflow via secure file transfer. To learn more about Energy Data Studio, please contact insight@eastdaley.com.
The Daley Note
Subscribe to The Daley Note (TDN) for midstream insights delivered daily to your inbox. The Daley Note covers news, commodity prices, security prices and EDA research likely to affect markets in the short term