Partners Paying for $2B Permian Pipeline likely to spur U.S., Mexico Gas-fired Generation

Subsidiaries of Kinder Morgan and Blackstone Energy Partners will invest in a $2 billion pipeline project to bring natural gas from the Permian Basin to the Texas Gulf Coast and Mexico.

Kinder Morgan Texas Pipeline LLC and EagleClaw Midstream Ventures LLC, a portfolio company of Blackstone, have completed the joint venture agreements and secured transportation deals with shippers for the Permian Highway Pipeline project. The Permian Highway Pipeline is expected to move up to 2 billion cubic feet per day of natural gas when it goes into service by late 2020.

Shippers already committed to the project include EagleClaw, Apache Corp. and XTO Energy, a subsidiary of Exxon Mobil, among others. Nearly all capacity available on the system is committed under long-term, binding agreements.

“We are delighted to partner with Kinder Morgan and Apache to support a project that will meet the growing infrastructure needs of Permian Basin producers, support the continued growth of the U.S. economy and create jobs for American workers,” David Foley, Chief Executive Officer of Blackstone Energy Partners, said in a statement.

Natural gas is playing an increasing role in electric power generation both in the U.S. and Mexico, due to bountiful production and reserves and, consequently, lower prices. The fuel source is creeping up to 35 percent of the U.S. generation mix, well above onetime fuel king coal’s 27 percent.

In Mexico, meanwhile, U.S. pipeline exports are spurring a revolution in how that nation generates electricity. Gas pipeline exports to Mexico have risen to about 4.4 billion cubic feet 9Bcf) per day, exceeding 5 Bcf in July, according to reports.

Gas-fired generation has more than doubled in the nation over the past decade. Mexican generation output from natural gas-fired technologies could reach close to 200 GWh by the end of the decade.

Blackstone Energy Partners is the energy-focused business of private equity firm Blackstone. Blackstone acquired business-to-business media and events enterprises Clarion and Pennwell in the past 14 months, and Clarion Events is now the parent company of Power Engineering.


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