Summit takes FID on Double E compression project

Summit Midstream announced this week that it had taken a final investment decision (FID) on the previously announced mainline compression expansion project on its Double E gas pipeline. The FID follows the closing of what Summit described as a “successful” open season.

The expansion project entails the installation of a bi-directional mainline compressor station on the Double E system. Summit said this would increase the pipeline's forward haul capacity to the Waha Hub by roughly 900mn cubic feet (25.5mn cubic metres) per day. The compression project, new plant connections and related infrastructure are expected to cost around $100mn net to Summit's 70% interest in Double E. The expansion is anticipated to be in service by the fourth quarter of 2028.

ExxonMobil holds the remaining 30% stake in the Double E system.

Summit said the Double E joint venture had already placed a purchase order for the long-lead gas turbine compression units required for the expansion project. According to the announcement, it has thereby secured manufacturing slots that align with the targeted in-service date for the expansion. However, Summit noted that the project remained subject to US Federal Energy Regulatory Commission (FERC) and other customary regulatory approvals.

The company also said that it had executed a new long-term take-or-pay firm transportation agreement with what it described as an “investment-grade” shipper for 200 mmcf (5.7mn cubic metres) per day. This agreement will support the expansion project and will bring total contracted firm capacity on Double E to around 2.2bn cubic feet (62.3 mcm) per day. This capacity is held by a “diversified group” of primarily investment-grade shippers, according to the announcement.

With the new agreement, Double E has secured roughly 550 mmcf (15.6 mcm) per day of binding long-term take-or-pay commitments through the compression expansion open season, Summit said. It added that the Double E joint venture continues to advance discussions with additional prospective shippers for the remaining capacity on the expansion.

"Today's announcement is a significant milestone for Summit and Double E and further demonstrates the importance of the pipeline to producers and processors in the Delaware Basin,” stated Summit’s president, CEO and chairman, Heath Deneke. “Double E provides reliable gas transmission service with access to multiple downstream markets, and we continue to expand that connectivity as the basin grows. The strong shipper interest we have seen through the open season reinforces the value of that position and our confidence in the long-term growth opportunity for Double E.”

When the project is fully subscribed, Summit expects the adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for its Permian Basin segment to increase from roughly $37mn in 2026 to over $100mn by 2030, according to Deneke.

The expansion illustrates the demand for new midstream infrastructure as gas producers ramp up output and as consumption also increases.

"As we look into the future for the Double E Pipeline beyond filling the mainline compression expansion capacity to Waha, we are very excited about a new phase of demand-pull growth opportunities that are emerging from data centre development in Texas and New Mexico as well as additional egress pipelines that are hungry for enhanced access to Permian gas supply,” Deneke said. “With our connectivity to numerous gas processing facilities in the basin and the Waha Hub, we are incredibly well positioned to attract those markets to the Double E Pipeline and leverage the bi-directional capability of the system to nearly double the outlook for the business in the years ahead."