A joint venture between Whitewater Midstream, MPLX LP and investment group First Infrastructure Capital will move forward with an expansion of the 1.4 Bcf/d Agua Blanca intrastate natural gas system that moves New Mexico supply to Waha.
The final investment decision to add a 42-inch diameter trunkline that more than doubles the system capacity to over 3 Bcf/d comes as midstream companies work to alleviate natural gas takeaway constraints that have arisen due to rampant oil drilling in the Permian Basin.
The Agua Blanca system currently consists of around 90 miles of 36-inch diameter pipeline and 70 miles of smaller-diameter pipelines with multiple deliveries in Waha. It services portions of Culberson, Loving, Pecos, Reeves, Ward and Winkler counties, all in Texas.
The expansion is supported by multiple 10-year, take-or-pay contracts.
Another Whitewater Midstream and MPLX-sponsored debottlenecking project in the Permian, Whistler Pipeline, would directly connect to Agua Blanca once it enters service in the second half of 2021. The 2 Bcf/d project was sanctioned in June.
Meanwhile, federal regulators last month approved Sendero Carlsbad Gateway LLC’s 400 MMcf/d natural gas pipeline to transport Permian supply across the New Mexico/Texas border.
Kinder Morgan Inc. was the first midstream company to help alleviate some of the gas constraints in the Permian, with its Gulf Coast Express starting operations this fall. However, the 2 Bcf/d pipeline filled quickly -- in about a month’s time -- and prices reverted back to the bargain-basement levels of last spring, when Waha averaged a record low of minus $5.75.
Kinder Morgan has another 2 Bcf/d pipeline in its arsenal, the Permian Highway Pipeline, but that project has been delayed to early 2021 from late 2020 due to a regulatory approval process that “has progressed a little more slowly than what our project plan contemplated,” CEO Steve Kean said last month.
The pipeline has encountered local pushback, particularly in the iconic Hill Country, and some landowners and environmental groups are seeking to sue under the Endangered Species Act.