Joint Development Planned for Permian Highway Pipeline

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Kinder Morgan Texas Pipeline, EagleClaw Midstream and Apache signed a letter of intent to develop the Permian Highway Pipeline (PHP) project, which will provide an outlet for natural gas from the Permian Basin to the Texas Gulf Coast.

The $2 billion PHP project is designed to transport up to 2 Bcf/d of natural gas through 430 miles of 42-inch pipeline from the Waha, Texas, area to the U.S. Gulf Coast and Mexico markets, Kinder Morgan said. Given the level of producer inquiry, the company is also evaluating the economic and hydraulic feasibility of a 48-inch pipeline with increased transportation capacity.

The project is expected to be in service in late 2020, subject to the execution of definitive agreements and the receipt of construction permits.

The natural gas supply will be sourced into the PHP project from multiple locations, including the three companies’ existing systems in the Permian Basin, with additional interconnections to both intrastate and interstate pipeline systems in the Waha area.

The project will hold capacity on Kinder Morgan’s intrastate pipeline systems in the market area, which will be able to deliver natural gas to the Katy and Agua Dulce market hubs, and Coastal Bend.

KMTP and EagleClaw will be the initial partners (50% each), and Apache, which has been jointly developing the proposed project, will have an option to acquire up to 33% equity from the initial partners. Apache and EagleClaw will be significant shippers on the proposed pipeline, with Apache planning to commit up to 500 MMcf/d. KMTP will build and operate the pipeline.

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