HOUSTON (Reuters) - NAmerico Partners LP is proposing a multibillion-dollar pipeline to ferry natural gas from fast-growing fields in West Texas to the Gulf Coast, the company said on Monday, angling to match plans by rivals such as Kinder Morgan Inc (KMI.N).
The pipeline, one of at least three being considered to ease a looming gas glut in the Permian producing region, would link to existing lines, including those that export gas to Mexico and to a Cheniere Energy Inc (LNG.A) liquefied natural gas export facility under construction.
The pipeline would be the first major project by NAmerico Partners, founded two years ago in Houston. The company is backed by private equity fund Cresta Energy LP, whose management includes former executives from Regency Energy Partners LP, a large energy infrastructure company that was bought by Energy Transfer Partners ETP.N in 2015.
NAmerico Managing Partner Jeff Welch told Reuters in an interview this week that discussions with prospective shippers were at an advanced stage, and the pipeline would begin operations in 2019 if enough of them committed to supplying gas.
He declined to identify the shippers but said the company was confident the project would proceed.
NAmerico’s 468-mile (753-km) pipeline, named the Pecos Trail Pipeline, would transport some 1.85 billion cubic feet per day of natural gas to the major Gulf Coast refining and petrochemical hub in Corpus Christi.
Last month, Kinder Morgan, which operates the largest natural gas pipeline network in North America, outlined a plan to build a 430-mile (692-kilometer) pipe traveling a similar route. It would be able to move 1.7 bcf per day of gas.
Enterprise Products Partners (EPD.N), another large pipeline operator, has said it may build a gas line to Corpus Christi, Texas, from the Permian.
“We’ve got this gigantic gas supply in West Texas, and big exports southbound and eastbound,” Rick Smead, managing director of advisory services for consultancy RBN Energy, said in a telephone interview.
Kinder Morgan has also said its pipeline would begin operations in 2019 if enough shippers commit.
Analysts said the potential for new supplies could allow multiple projects to proceed.
The projects are being planned as big producers including Exxon Mobil (XOM.N), Apache Corp (APA.N), and Chevron Corp (CVX.N) are expected to pour billions of dollars into drilling in the Permian, a vast shale play in West Texas known for its low production costs and massive reserves.
Demand for natural gas in south Texas and the Corpus Christi area is expected to soar in the coming years. Cheniere Energy has said it has customers for 8.42 million metric tons a year of LNG from its site, which is expected to begin operations around 2018.
Exxon and Saudi Basic Industries Corp (2010.SE), an arm of Saudi Aramco, the state-owned energy company, also have proposed building a multibillion-dollar chemical and plastics plant outside of Corpus Christi. That plant would use natural gas as a raw material.
Natural gas production in West Texas is expected to more than quadruple by the middle of the next decade, Scott Sheffield, chief executive of Pioneer Natural Resources Co (PXD.N), a large Permian producer, said last month.
Gas production in the Permian is projected to reach 7.9 Bcf/d in April, up from 5.4 bcf/d the same month in 2014, according to the U.S. Energy Information Administration.
The number of drilling rigs operating in the region has more than doubled in the last year to 319 as of March 31, according to energy services provider Baker Hughes BHI.N.
While companies are primarily drilling in the Permian for crude, natural gas comes up along with it. The EIA estimates each new rig in March added in the Permian increases the field’s gas production by 1.1 million cubic feet a day.
Reporting by Liz Hampton; Editing by Gary McWilliams and Richard Chang