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Energy Transfer LP Races to Carry Permian Basin Gas to Gulf Coast Hubs
03/01/2022
The Permian Basin's abundance of resources — given that it's the largest shale field in North America —, quickly became the driving force behind Energy Transfer LP's plans for a natural gas pipeline from West Texas and eastern New Mexico to export hubs on the Gulf Coast. The project under consideration would combine new and existing pipelines to serve coastal gas hubs.
A 260-mile new build pipeline would extend eastward from the Midland sub-basin along existing rights-of-way, interconnecting with Energy Transfer’s existing 36-inch pipeline near Fort Worth, Texas.
Given the proposed route and Energy’s ability to utilize existing assets, construction could be completed in two years or less once the parties involved have reached FID (final investment decision). The company's Co-CEO Thomas Long also corroborated this timeline.
A race to build pipelines in the Permian Basin has been triggered due to the increasing quantity of natural gas production under the Permian and the ever-increasing demand for natural gas exports from the Gulf Coast. Various companies, including Kinder Morgan Inc. and MPLX LP, are looking at building new pipelines in the region due to the demand spike.
Energy Transfer likely edged past Kinder Morgan and others into the lead for building the next Permian pipeline since the project strikes as the most economical option for the basin outside of capacity expansions on existing pipelines and could essentially add 1.5-2 Bcf/d of transport capacity with just 260 miles of new pipe.
Additionally, Energy Transfer announced that work had started on the Gulf Run Pipeline, which will connect Louisiana to the rest of the nation and international markets for natural gas transmission. To help meet growing global energy demand, existing assets will also be modified to complete the project.
Approximately 135 miles of the pipeline would run between Westdale and Starks. Enhancing and repurposing some underutilized infrastructure in northern Louisiana will be accomplished by modifying Line CP.
QatarEnergy and Exxon Mobil Corporation both have signed a 20-year agreement under which a $10 billion Golden Pass LNG export plant for this project is going to be built in Texas, and will provide 1.65 billion cubic feet of natural gas daily.
As a result of all those strings being pulled, Gulf Run should be completed by the end of 2022. At least according to Energy Transfer’s Top management statements.
But not all of Energy’s programs have “ongoing” or “underdevelopment” statuses. While management boasted about future prospects, there was also an announcement that the company had finally completed the last phase of its long-delayed Mariner East NGL pipeline expansion in Pennsylvania. A fine boost to the company's trust ratings. After all, actions speak louder than words.
On that note, If you are interested in learning more about the gas infrastructure and prospects of its development, connect with our Houston sales office to see the intelligence for yourself or SCHEDULE A DEMO with us to learn how Rextag can help you leverage the energy data in your business.
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Evolution Acquires Non-operated Wyoming Natural Gas Interests
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Evolution Petroleum just spend a fortune on Jonah’s Field right after acquiring Hamilton Dome Field in Wyoming. The price of the transaction is $29.4 million. The Houston-based company aims to diversify into natural gas assets, providing access to the western markets through the Opal market hub, with the optionality to flow to the east. That transaction took effect on February 1. We anticipate closing on or about April 1.
$7 Billion Merger of Colgate and Centennial, the 2 Largest Permian Operators
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Despite the circulating rumors concerning Colgate’s attempt to launch an IPO, on May 19 the company decided to combine with Centennial Resource Development Inc. This merger of equals is estimated at $7 billion and will found the biggest pure-play E&P company in the Delaware Basin of the Permian. The transformative combination essentially enlarges companies’ potential and hastens the growth across all financial and operating metrics. According to Centennial CEO Sean Smith, the combined company is anticipated to furnish shareholders with quickened capital return program due to a fixed dividend coupled with a share repurchase plan. Due to a recent report, the merger would increase production 7%, to 145,000 boe/d by the fourth quarter would further ratchet up next year. By third-quarter 2023, the company predicted 160,000 boe/d based on a drilling program of 140 wells per year. Colgate Energy was reported to be getting an IPO last December that sources said would value the company at approximately $4 billion. The combined company will have over 15-years of drilling inventory, assuming its current drilling pace, the companies will produce over $1 billion of free cash flow in 2023 at current strip prices.
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Shareholder’s payout target was increased by 50% after the largest U.S. independent oil producer surpassed Wall Street’s earnings estimates on growing energy prices, said Houston-based Conoco Phillips Co. on Aug. 4. Due to Western sanctions on major producer Russia throttling energy supply amid a rebound in demand from pandemic lows, oil and gas #prices have soared. Crude has been trading more than 25% higher since the start of the year and results also benefited from high natural gas prices. Meanwhile, shares were down a fraction, to $91.03, in early trading but are up about 26% year to date. Conoco Phillips stated, that the average price obtained for a barrel of oil and gas accelerated 77% from a year earlier to $88.57. The company acknowledges that it has not hedged any of its oil and gas sales to make the most of higher market prices. The capacity of 1.69 million boe/d was in line with Wall Street estimates, however, the company expected the current quarter’s output would be between 1.71 million and 1.76 million boe/d.
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California oil joint venture, Aera Energy, of Exxon Mobil Corp. and ShellPlc is being sold to German asset manager IKAV, according to the agreement of Sept. 1. Shell noted that the sale of its 51.8% membership interest in Aera Energy is for a total consideration of about $2 billion in cash with additional contingent payments based on future oil prices, subject to regulatory approval. However, the total transaction value was not disclosed. Being one of California’s largest oil and gas producers, Aera Energy accounts for nearly 25% of the state’s production. The sale by Exxon Mobil and Shell ends a 25-year-long partnership in California, meanwhile, it persists a streak of divestments of mature oil and gas properties by the two supermajors. Aera Energy LLC operates about 13,000 wells in the San Joaquin Valley in California, producing oil and associated gas. In 2021, Aera took out about 95,000 boe/d. Exxon Mobil’s interests in the Aera oil-production operation in California contained a 48.2% share of Aera Energy LLC and a 50% share of Aera Energy Services Co. held by Mobil California Exploration & Producing Co. Moreover, Exxon Mobil affiliates have signed a separate agreement for the sale of an associated loading facility and pipeline system. The sale effectively ends Shell’s upstream position in California. The company reported that the divestiture is valued to result in a post-tax impairment of $300 million to $400 million, subject to adjustments.
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The completion of the merger between Centennial Resource Development Inc. and Colgate Energy Partners II LLC happened on Sept. 1, sealing the debut of Permian Resources Corp., which is considered the largest pure-play E&P company in the Delaware Basin. Permian Resources’ idea was to combine two successful E&P companies, creating a better, stronger, and more strategically compelling company. Centennial and Colgate announced an agreement to merge in May, denying rumors that Colgate, a privately held independent Midland-based company, had been seeking an IPO. The merger estimated Colgate at about $3.9 billion and consists of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt. Permian Resources, being the combined company, has a deep inventory of “high-quality” drilling locations on around 180,000 net acres the companies anticipate will provide more than $1 billion of free cash flow in 2023 at current strip prices, in accordance with the company release on Sept. 1.