Biggest Gas Pipeline Buildout Since 2008 Propels Trump Energy Push
Sempra’s Port Arthur LNG plant under construction in Jefferson County, Texas.
(Bloomberg) — The biggest natural gas pipeline boom in nearly 20 years is unfolding in the US South as companies build systems to feed massive export terminals rising along the Gulf of Mexico.
As many as 12 projects to install new pipelines or expand existing ones are on pace to be completed next year in Texas, Louisiana and Oklahoma, increasing the region’s capacity to ship gas by 13%, according to data compiled by Bloomberg from US Energy Information Administration estimates. It will mark the biggest one-year expansion for Gulf Coast pipelines since the height of the shale-gas boom in 2008.
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All told, the new systems will carry enough gas to supply all of Canada.
“This is the most activity I’ve seen in my 20 years in the industry,” said Jack Weixel, senior director at East Daley Analytics.
While the pipelines were underway long before President Donald Trump began his second term, the sweeping expansion is a key piece of his push to dramatically expand US gas exports and dominate global energy markets. The new systems will also offer relief to drillers in West Texas, where gas production is prolific and pipeline capacity is so tight that companies often pay customers to take the fuel away or burn it off as waste.
The key driver of the building boom is soaring demand for gas around the globe. The US is the world’s largest producer and exporter of the fuel. And Sempra, NextDecade Corp., Venture Global Inc. and others are investing tens of billions of dollars to build new terminals to liquefy and ship even more to Europe, Asia and elsewhere.
All those export terminals will need pipelines to bring them the gas. The ones on pace to be finished next year will mostly feed the wave of LNG terminals scheduled to start operating in 2027 and beyond, said Rohan Nimmagadda, an analyst at energy infrastructure analytics firm Arbo.
“Pipeline development tends to respond to LNG export capacity — not so much drive it,” Nimmagadda said.
Environmentalists have decried development of LNG export terminals along the Gulf Coast, warning they will help guarantee that gas remains part of the energy mix for decades, paving the way for nations to keep burning the fuel until it’s too late to stave off the worst of global warming. Advocates of the projects, which can cost upward of $20 billion for a single terminal, say they’re crucial to help nations in Asia and elsewhere move beyond coal and other dirtier fuels.
Global demand for LNG is forecast to rise by nearly a third between 2025 and 2030, according to BloombergNEF.
The pipelines scheduled to begin operations next year will add a total of about 18 billion cubic feet per day of capacity to the Gulf Coast region.
Some of the biggest include the Rio Bravo Pipeline, a 137-mile (220-kilometer) system being developed by Enbridge Inc. that will feed NextDecade’s Rio Grande LNG project in Brownsville, Texas.
Another key one is the Blackcomb Pipeline, a 366-mile line out of the Permian Basin being developed by a joint venture that includes Whitewater Midstream LLC, MPLX LP, Enbridge Inc. and gas processor Targa Resources Corp. Other projects are being built or expanded by Kinder Morgan Inc., Williams Cos. and Energy Transfer LP.
“You can’t have an LNG project without these pipelines,” said Jason Bennett, a Houston-based partner at Baker Botts LLP who works on development and financing energy projects.
Texas and Louisiana tend to be more welcoming to oil and gas infrastructure than many other states, and that support can lead to swift and more certain regulatory approvals. What’s more, the pipelines currently being constructed in the region are generally short, most running just a few hundred miles and without crossing state lines.
That means they don’t need certain federal permits that can translate into longer reviews and provide an opening for additional legal challenges by environmentalists, who’ve been able to use courtroom fights to thwart inter-state pipeline projects along the East Coast.
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In the Permian Basin, much of the gas flows from wells drilled primarily for oil. There’s such an abundance of it that pipelines are packed to the hilt. On dozens of occasions this year, gas prices in the region have plunged below zero as sellers literally have to pay customers to take the fuel off their hands.
“The general rule of thumb is the Permian needs a mega pipeline every 16 to 18 months,” Amol Wayangankar, founding principal of Enkon Energy Advisors, said in an interview.
Some of the new projects being built will help ease that issue, including Energy Transfer’s 442-mile Hugh Brinson Pipeline, which will transport gas from West Texas to the Dallas-Fort Worth area. From there, it can flow to multiple destinations in Texas and Louisiana, including LNG export facilities and data centers.
Energy Transfer expects the pipeline to be its most profitable asset ever built, thanks in part to demand in the region from artificial intelligence.
On Thursday, Enterprise Products Partners LP announced it would work with Exxon Mobil Corp. to expand capacity and extend the Bahia pipeline in Texas after the oil giant agreed to acquire a 40% stake in the project. The 550-mile pipeline carries natural gas liquids from West Texas to the Houston area.
The surge of projects expected to come online in 2026 won’t be a single-year blip. A similar amount of pipeline capacity is on pace to be added to the Gulf Coast in 2027, according to a Bloomberg analysis of US Energy Information Administration estimates.
“Natural gas is definitely on,” said Caitlin Tessin, Enbridge’s vice president of market innovation and Gulf Coast business development. “The country is thirsty.”
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