Targa Resources is teaming up with subsidiaries of NextEra Energy Resources and Marathon Petroleum, as well as WhiteWater Midstream, to build a 620-mile (998-km) gas pipeline system from the booming Permian Basin to the US Gulf Coast.
The Whistler project – which joins three other major projects in the works – will ship roughly 2.0 bcf (57 mcm) per day of natural gas to the Corpus Christi and Houston areas. WhiteWater is a portfolio company of private equity firms Denham Capital Management and Ridgemont Energy Partners.
The project will include 450 miles (724 km) of 42-inch (1,067-mm) pipeline from Waha, Texas to NextEra’s Agua Dulce market hub. An additional 170 miles (274 km) of 30-inch (762-mm) pipeline will continue from Agua Dulce and terminate in Wharton County.
The Whistler pipeline will access the Nueces Header and premium markets at Agua Dulce, said Targa in a statement. It would also access the Houston Ship Channel to serve markets along the Texas Gulf Coast along a northern extension through Corpus Christi.
Gas for the pipeline will be sourced in the Permian’s Midland and Delaware sub-basins, including from direct connections to Targa plants through a 27-mile (43-km) 30-inch pipeline lateral.
Whistler will also directly connect to the 1.4 bcf (40 mcm) per day Agua Blanca Pipeline, a joint venture between WhiteWater, WPX Energy, MPLX – Marathon’s master limited partnership – and Targa. The Aqua Blanca pipeline passes through the heart of the Delaware Basin, including Texas’ Culberson, Loving, Pecos, Reeves, Winkler, and Ward counties.
Targa, NextEra, MPLX and WhiteWater – and their customers – will collectively commit volumes in excess of 1.5 bcf (42 mcm) per day to the Whistler pipeline. The project, which is due to begin operations in the fourth quarter of 2020, will be constructed by NextEra Energy Pipeline Holdings and operated by Targa. An open season for the remaining capacity on the pipeline is expected in the coming months.
The Permian, where gas is a by-product of tight oil drilling, is currently struggling with a lack of takeaway capacity that is not expected to start easing until 2019 when the Gulf Coast Express pipeline is built. Gas prices at the Waha Hub in the basin have been increasingly lower than at Henry Hub in Louisiana because of these pipeline bottlenecks.
Indeed gas prices at Waha have been nearly US$1 per mmBtu (US$27.66 per 1,000 cubic metres) lower than Henry Hub prices, noted the US Energy Information Administration (EIA) in mid-July. Permian gas production averaged 10.4 bcf (295 mcm) per day in June 2018, up by 2.1 bcf (59 mcm) per day on June 2017, according to the EIA.