The Daley Note: March 28, 2023
Whitewater Midstream plans to build a massive natural gas pipeline through southeastern Texas that appears to be intended as an extension of the Matterhorn Express Pipeline.
On March 8, the Railroad Commission (RRC) of Texas approved Whitewater’s permit to construct Blackfin Pipeline, a 48-inch pipeline running from Colorado County, TX to Jasper, TX, north of Beaumont.
According to the application, Blackfin’s economic operator would be Matterhorn Express Pipeline, the 2.5 Bcf/d pipeline under construction out of the Permian Basin. The Matterhorn joint venture includes EnLink Midstream (ENLC), Devon Energy (DVN) and MPLX (MPLX). The partners took a final investment decision (FID) on Matterhorn in May 2022 and are targeting start-up in 3Q24.
Starting west of Katy, Blackfin Pipeline would take a northern route for 193 miles around the Houston metro area to Jasper, near the Texas-Louisiana state border (see map from RRC application). The pipeline could take Eagle Ford supply but, given it would start where Matterhorn Express terminates, East Daley suspects Blackfin will primarily serve as additional egress to debottleneck the Katy area.
With more Permian supply set to move to the Gulf Coast via Matterhorn, a project like Blackfin would help prevent prices at Katy and the Houston Ship Channel from discounting compared to Transco Zone 2 at the TX-LA border.
Blackfin would also help answer how Matterhorn shippers plan to move new Permian volumes further downstream. As East Daley highlighted in Dirty Little Secrets, midstream has many investment opportunities ahead to connect gas supply from the Permian and ArkLaTex to LNG export facilities planned on the Gulf Coast.
Blackfin’s initial application doesn’t provide much detail, but East Daley expects the pipeline to be leveraged by JV partner Devon to supply its 1 MMtpa (~130 MMcf/d) commitment to the Delfin LNG floating LNG export project. DVN has an option to increase its project commitment to 2 MMtpa (~260 MMcf/d).
Delfin LNG is planned in shallow Gulf waters near the TX-LA border and would leverage Kinder Morgan’s (KMI) Tennessee Gas pipeline and Genesis Energy’s (GEL) High Island Offshore System (HIOS). We think Blackfin could also potentially tie into the Transco, Trunkline, and Texas Eastern systems, given its proposed route. – Alex Gafford Tickers: DVN, ENLC, GEL, KMI, MPLX.
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