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Proposed Whistler Pipeline to Move 2 Bcf from Permian to Texas Coast

With an eye on moving more natural gas from the Permian Basin to the Texas coast, four operators led by Houston’s Targa Resources Corp. have rolled out plans to develop the 2 Bcf/d Whistler Pipeline Project, which if sanctioned could help deliver up to 7 Bcf/d to Gulf Coast markets and beyond.

Targa said a letter of intent is in place for the joint venture (JV) project with MPLX LP and NextEra Energy Pipeline Holdings LLC, a subsidiary of NextEra Energy Resources LLC, as well as WhiteWater Midstream LLC,which is a portfolio company of Denham Capital Management and Ridgemont Energy Partners.

Whistler, proposed as a 42-inch diameter pipeline that would run 450 miles, would transport gas from the Waha hub in West Texas to NextEra’s Agua Dulce market hub near Corpus Christi. From Agua Dulce, a 30-inch diameter pipeline would run 170 miles south and terminate in Wharton County, southwest of Houston.

Supply for Whistler would be sourced from “multiple upstream connections” in the Permian’s Midland and Delaware sub-basins, including direct connections to Targa plants through a 27-mile, 30-inch diameter pipeline lateral.

A direct connection for Whistler also would be via the 1.4 Bcf/d Agua Blanca Pipeline, a JV between WhiteWater, WPX Energy Inc., MPLX and Targa, which crosses through the heart of the Delaware sub-basin in West Texas through portions of Culberson, Loving, Pecos, Reeves, Winkler, and Ward counties.

Whistler would have access in South Texas to the Nueces Header and markets at Agua Dulce, as well as along a northern extension through Corpus Christi to the Houston Ship Channel to serve markets along the Texas Gulf Coast.

Targa, NextEra, MPLX, WhiteWater and their producer customers are expected to collectively commit at least 1.5 Bcf/d to Whistler, with operations eyed for late 2020.

The potential partners have committed to be exclusive to Whistler for an undetermined period of time to complete definitive agreements, Targa said. Whistler would be constructed by NextEra Energy Pipeline Holdings and operated by Targa. Whistler is expected to be financed at the project level.

In addition to the commitments of the sponsors and their producer customers, the project’s team is negotiating for additional firm transportation commitments and is expected to launch an open season in the coming months, Targa said.

Whistler could cost $2.3-2.5 billion, which at the project level would reduce pressure on individual balance sheets, according to Tudor, Pickering, Holt & Co. Inc. (TPH).

Combined with Kinder Morgan Inc.’s confirmed 2 Bcf/d Gulf Coast Express pipeline project, scheduled for in-service in late 2019, and the Kinder-led Permian Highway Pipeline, which if sanctioned could ramp up in late 2020, Whistler could add “6.0-7.0 Bcf/d of incremental Permian natural gas takeaway,” TPH analysts said.

In a blog post Monday for RBN Energy LLC, energy analyst Jason Ferguson said Whistler is set apart from the “typical bullet pipeline” in the “cooperative of companies involved, each contributing to some piece of the project.”

For example, WhiteWater has a footprint in the Delaware, while NextEra has Mexico access via the 2.1 Bcf/d NET Mexico pipeline, Ferguson noted.

“What really sets the project apart, though, is the planned Whistler Extension pipeline,” he said, as it would provide shippers with optionality to access liquefied natural gas facilities, industrial and power demand, as well as storage facilities. “At present, there are no other proposals on the table that would provide capacity on the scale of the extension.”

In RBN’s view, “the Whistler approach to solving the problem of linking Permian Basin gas supplies to the Gulf Coast is not only unique but stands a high chance of succeeding where others haven’t so far.”

Texas is often considered an “easy” place to build pipelines as its intrastate system is not regulated by the Federal Energy Regulatory Commission. However, “there remains a significant incumbent advantage that must be overcome by newcomers looking to lay 400-plus miles of pipeline in the Lone Star State,” Ferguson said. “That advantage is mostly held by the existing major intrastate pipeline companies, who maintain vast networks in both the supply and market basins of Texas.”

Connecting supply with demand means “a creative and cooperative approach is useful,” he said. “When it comes to the Whistler Pipeline, a ‘do what it takes’ mentality might have finally yielded an approach that could not only get a new pipeline built, but potentially shift the dynamics of the Texas intrastate markets for some time to come.”

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