Several new downstream pipeline meters have started service in South Texas tied to the Permian Highway Pipeline (PHP), suggesting a planned expansion has been placed in service.
Operator Kinder Morgan (KMI) had targeted December 1 for the start-up of new compression, adding 0.5 Bcf/d of capacity to PHP. East Daley Analytics noticed two new meter points began reporting data on December 1 where PHP ties into Natural Gas Pipeline of America (NGPL) and Tennessee Gas Pipeline (TGP) in Wharton County, TX. In the first week of December, NGPL received ~100 MMcf/d at the new meter while flows to TGP averaged ~120 MMcf/d.
The start of flows coincides with KMI’s planned in-service date for the PHP expansion. EDA does not know if the meters are drawing new Permian Basin production or are diverting receipts from other processing plants. We noted recently that samples of Permian Basin receipts on interstate pipes hit a new record high in November ‘23 of 6.3 Bcf/d, an indication of rising production.
The El Paso Natural Gas system accounted for a large share of the gains in the November samples. Interestingly, El Paso receipts from the Permian declined W-o-W by ~220 MMcf/d in the first week of December. The Alpine High and Raptor G&P systems owned by Kinetik (KNTK) have been responsible for most of the recent swings in El Paso samples. KNTK is also an equity owner and shipper on PHP, and the company could be redirecting flows from El Paso to the new expansion.
In the Permian Basin Supply and Demand Forecast, EDA expects Permian residue gas production to quickly fill the PHP expansion (see figure). We model Permian production exits 2023 at 17.4 Bcf/d, a Y-o-Y increase of 2.3 Bcf/d. New natural gas processing and egress pipeline expansions like the PHP project have supported higher supply from the basin, contributing to downward pressure on gas prices recently. – James Taylor Tickers: KMI, KNTK.
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