Energy Transfer Eyes Permian Gas Pipeline, Starts Gulf Run Construction

(Reuters) — Energy Transfer has joined at least two other companies looking to build the next pipeline to transport growing natural gas production from the Permian Basin to export hubs on the Gulf Coast.

"Given the proposed route and our ability to utilize existing assets, we believe we could complete construction of (the Permian) project in two years or less once we have reached FID (final investment decision)," Energy Transfer Co-Chief Executive Thomas Long told analysts on an earnings call late Wednesday.

With production growing fast in the Permian and demand rising from new liquefied natural gas (LNG) export plants on the Gulf Coast, some other companies are also looking to add new gas pipelines in the region, including units of Kinder Morgan and MPLX.

Analysts at Mizuho said Energy Transfer likely squeezed past Kinder Morgan into the lead position to build the next Permian pipeline since Energy Transfer's project could add around 1.5-2.0 Bcf/d of transport capacity with only around 260 miles (418-kilometer) of new pipe.

Energy Transfer's announcement "strikes us as the most economic option for the basin outside of capacity expansions on existing pipelines," Mizuho said.

Energy Transfer also said it started building the Gulf Run pipeline in Louisiana to move gas from the Haynesville Shale in Texas, Arkansas and Louisiana to the Gulf Coast.

The 1.65-bcfd Gulf Run is backed by a 20-year agreement with QatarEnergy (70%)/Exxon Mobil Corp's XOM.N (30%) $10 billion Golden Pass LNG export plant under construction in Texas.

Energy Transfer's Long said the company expects to complete Gulf Run by the end of 2022.

Marshall McCrea, Energy Transfer's other co-CEO, told analysts the company was still working on its own LNG export project at Lake Charles in Louisiana.

"We hope to be able to announce some agreements that we are close to getting signed over the next few years," McCrea said, noting the company was "still a ways from FID but we are really excited about where that project is going."

Separately, Energy Transfer said it completed the last phase of its long-delayed Mariner East natural gas liquids pipeline expansion in Pennsylvania.

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