Kinder Morgan, Inc’s KMI subsidiary — Kinder Morgan Texas Pipeline LLC (KMTP) — has inked a letter of intent for the development of the planned Permian Highway Pipeline (PHP) Project with EagleClaw Midstream Ventures, LLCand Apache Corporation APA. EagleClaw is a portfolio company of Blackstone Energy Partners.
The PHP project, estimated at $2 billion, will provide a channel to transport the increased natural gas production from the Permian Basin to emerging market areas along the Texas Gulf Coast. The project is intended to transfer about 2 billion cubic feet per day (Bcf/d) of natural gas from the Waha area, Texas, to the U.S. Gulf Coast and Mexico markets, via a 42-inch pipeline of about 430 miles. The project is anticipated to come online by late 2020.
Kinder Morgan is also appraising the economic and hydraulic viability of a 48-inch pipeline with increased transportation capacity owing to enhanced interest of producers.
The PHP Project will receive natural gas supply from numerous locations, including Kinder Morgan’s, EagleClaw’s and Apache’s existing systems in the Permian Basin with additional interconnections to intrastate and interstate pipeline systems in the Waha area. The PHP Project will hold the supply on Kinder Morgan’s intrastate pipeline systems in the market area.
Thereafter, the supply will be delivered to various markets, including the Katy market hub, the Agua Dulce market hub, the Coastal Bend and Kinder Morgan Tejas headers connected to the Freeport LNG export facility, the Cheniere header linked to the Cheniere Corpus Christi LNG export facility as well as several pipelines along the Texas Gulf Coast.
Initially, Kinder Morgan and EagleClaw will be equal partners in the PHP Project holding 50% each. Apache, who has been jointly developing the planned project, will have the option to purchase about 33% equity in the project from the initial partners.
Apache and EagleClaw will be the primary shippers on the planned pipeline, with Apache proposing to consign about 500,000 dekatherms per day. Kinder Morgan, the operator of the pipeline, will also be responsible for construction.
Price Performance
In the past three months, Kinder Morgan’s shares have gained 13.5% compared with the industry’s 8.1% rise.
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Zacks Rank & Key Picks
Kinder Morgan currently carries a Zacks Rank #3 (Hold).
A few better-ranked players in the same sector are Occidental Petroleum Corporation OXY and China Petroleum and Chemical Corporation SNP. These stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% in the last four quarters.
Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the last four quarters.
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