(Reuters) - Kinder Morgan Inc has begun internal discussions about building a third natural gas pipeline in the Permian Basin as demand for gas takeaway capacity continues to surge, Chief Executive Officer Steven Kean told investors on Wednesday.
As natural gas production has outpaced pipeline capacity in the Permian Basin, a gas glut has led to plummeting prices in the region, with spot prices at the Waha hub even trading at negative levels.
Kinder Morgan believes demand for gas takeaway capacity could grow by 2 billion cubic feet per day each year over the next few years, equivalent to the Houston pipeline operator’s Gulf Coast Express project, Kean said.
“Demand to get gas out of the Permian continues to grow and the desire to unlock value that’s in oil and (natural gas liquids) continues to put pressure on need for additional takeaway capacity,” Kean said. “There is interest in pipe three.”
Kinder Morgan’s Gulf Coast Express natural gas pipeline in the Permian Basin is set to come into service in October. Another similar project, the Permian Highway, is on schedule to begin service one year later.
Reporting by Collin Eaton in Houston; Editing by Peter Cooney and Lisa Shumaker