Kinder Morgan’s highly anticipated Permian Highway Pipeline Project is now 79% mechanically complete. The company also noted that mainline compression on the project is 97% complete.
Kinder Morgan expects the US$2 billion pipeline to go into service in early 2021. Despite the challenging market conditions, Kinder Morgan believes it can still return double-digit, un-levered after-tax returns on the project.
The company said that its midstream natural gas segment is the greatest contributor to its 9% anticipated decline in 2020 earnings before interest, taxes, depreciation, and amortization (EBITDA). Part of that decline is from producer bankruptcies and lower throughput from its Bakken, Eagle Ford, and Haynesville shale pipelines.
The Permian Highway Pipeline Project will have a capacity of 2.1 bcfd (59.4 x 106 m3/d) through 430 miles (692 km.) of pipe. The project’s goal is to transport natural gas from the Permian Basin in west Texas through 42-in. (106.7-cm.) pipe to the US Gulf Coast. From there, natural gas can be shipped to Mexico, which remains the largest source of US natural gas exports, or be cooled and condensed in the form of liquefied natural gas (LNG) for shipment to countries around the world.