Enterprise Product Partners LP has begun service at the Mentone 3 cryogenic natural gas processing plant in West Texas, one of several steps midstream companies are taking this year to add sorely needed takeaway capacity from the Permian Basin.
Enterprise’s third processing plant in the Permian’s Delaware sub-basin has a nameplate capacity of 300 MMcf/d and is able to extract more than 40,000 b/d of natural gas liquids (NGL). The Houston-based company also plans to build a similar West Texas plant, Mentone West 2, in Loving County by mid-2026.
Together with a fourth plant, Mentone West 1, expected to be completed later this year, Enterprise would be able by 2026 to process 2.8 Bcf/d and extract 370,000 b/d of NGLs in the Delaware.
“We are so tight right now” on pipeline capacity, Enterprise co-CEO Jim Teague said on an investor call Wednesday. Management earlier this year said natural gas was being held back in the Permian to await more compression and processing capacity.
In addition, Enterprise’s NGL volumes have filled up the Shin Oak pipeline system and required the Seminole Red pipeline to switch from crude oil to NGL service until the Bahia pipeline comes online in 2025, Teague said.
Price Relief
West Texas natural gas cash prices have been mired in negative territory for much of the past month, with burgeoning Permian output stranded by limited spare pipeline capacity amid a flurry of maintenance projects.
Permian benchmark spot price Waha flipped negative March 5 and sank as low as negative $1.155/MMBtu mid-month before trading on either side of zero into April.
Additional egress would support prices. However, Permian gas output has quickly filled up new pipeline capacity. Last year, Kinder Morgan Inc. added 550 MMcf/d of capacity to the Permian Highway Pipeline (PHP). In addition, MPLX LP and Whitewater Midstream LLC added 500 MMcf/d of capacity to the Whistler Pipeline.
The greenfield Matterhorn Express Pipeline, also being developed by MPLX and Whitewater, would add 2.5 Bcf/d of takeaway capacity from Waha once online later this year.
Permian wells produce mostly oil along with associated natural gas, making their output resistant to weak gas prices. However, with outbound capacity pinched and demand weak, associated gas production has slowed since hitting new highs during the winter, contributing to an overall decline in Lower 48 natural gas production.
Double E Open Season
In related news, Summit Midstream Partners LP has launched a nonbinding open season through April 29 to gauge interest for using available capacity on its Double E natural gas pipeline, a key link to supplying additional flows to Matterhorn when it comes online.
The 43-inch diameter Double E interstate pipeline stretches 135 miles from the Delaware in New Mexico to the Waha hub in West Texas. Double E also connects to existing pipelines including the Gulf Coast Express and PHP.
“Most, if not all, of the existing capacity out of New Mexico to Waha is subscribed today,” Summit’s Mark Beyer, senior vice president, Commercial and Business Development, told NGI. “The remaining capacity on Double E is the only capacity, to our knowledge, available for shippers to secure incremental long-term firm takeaway capacity out of New Mexico to Waha.”
The 1.35 Bcf/d pipeline has about 0.5 Bcf/d of unsubscribed capacity, but it could be expanded to 2.2-2.5 Bcf/d with additional compression, Beyer said.
“This open season is in response to recent expressions of interest that we received from prospective shippers,” he said.
Shippers, including XTO Energy Inc., Marathon Petroleum Corp., Matador Resources Co. and EOG Resources Inc., have contracted 70% of the current pipeline capacity, according to Beyer. ExxonMobil is an anchor shipper with a 30% stake in Double E. The pipeline was sanctioned in June 2019 and authorized by federal regulators in October 2020.
The Houston-based pipeline operator has not held an open season for Double E since December, when it finalized its agreement to connect the Janus processing plant. Janus is expected to come online in the first quarter of 2025.
