Permian Highway Pipeline

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Permian Highway Pipeline, also called the Permian Highway Mountain Pipeline, is an operating gas pipeline in Texas.

Location

The pipeline runs from Waha, Texas, USA to Katy, Texas, USA.

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Project details

• Operator:
• Owner: Permian Highway Pipeline LLC
• Parent company: Kinetik Holdings (53.3%), Kinder Morgan (26.7%), ExxonMobil (20%)
• Capacity:
  • Original capacity: 2.1 billion cubic feet per day
  • Capacity after expansion project: 2.65 billion cubic feet per day
• Length: 692 kilometers / 430 miles
• Status: Operating
• Cost: US$2 billion
• Start year: 2020
• Financing: US$545 million in debt from a consortium of international banks

Background

The pipeline holds capacity on Kinder Morgan’s intrastate pipeline systems in the market area, which delivers fossil gas to the Katy and Agua Dulce market hubs, and Coastal Bend.

As of August 2019, construction had already begun on the Midland-area pipeline section. The company expects to start construction on the eastern portion prior to October. In the next few months, Kinder Morgan planned to start construction on the other sections of the pipeline – which included the Hill Country. According to Kinder Morgan, they were on track to having the pipeline in operation by the fourth quarter of 2020.

In July 2020 as it posted its Q2 2020 results, Kinder Morgan said that it expected to start the Permian Highway Pipeline in early 2021.

As of December 7, 2020 the pipeline was fully operational. The pipeline entered full service on January 1, 2021. Kinder Morgan said the Permian Highway is fully subscribed under long-term contracts.

Opposition

There has been significant opposition to the project, resulting in attacks from multiple fronts. A small coalition of individuals and groups based in Central Texas, united around stopping the project, organized a Week of Action from June 29, 2020 to August 1, 2020. The Week of Action culminated in a car caravan on August 1, 2020. Organizers provided a social media toolkit and organized through a Facebook page.

In September 2020, following a request by the Sierra Club for a preliminary injunction based on the group alleging that the pipeline had been approved via a faulty streamlined federal review, U.S. District Judge Robert Pitman in Austin, Texas, ruled that construction could continue when he denied the Sierra Club request. According to Judge Pitman, the environmental group failed to show that continued construction would cause irreparable harm to landowners or endangered species.

Environmental Impacts and Opposition

In June of 2019, Hays County, Travis Audubon Society, and three other plaintiffs plan to file a notice of intent to sue Kinder Morgan, the Army Corps of Engineers, and the U.S. Fish and Wildlife Service. Using the Endangered Species Act, plaintiffs are hoping to compel an extended federal environmental study about the impact the pipeline would have on the golden-cheeked warbler’s habitat. Plaintiffs argue that the proposed pipeline would destroy the native habitat of the golden-cheeked warbler, an endangered songbird that nests in the juniper woodlands of Texas Hill Country. There is an estimated population of 27,000 golden-cheeked warblers left in the wild.

Also in June of 2019, the Austin City council passed a resolution directing the Watershed Protection Department to look into the potential water quality impacts of the pipeline. The city of Austin expressed concerns about the Hill Country portion of the pipeline, which the city believes could have impacts on water quality in the Barton Springs and for the Austin-area. The pipeline will cross the Edwards Aquifer Recharge Zone in an area that provides water to Barton Springs in Austin. The city’s report stated that existing laws are not enough to ensure that “no adverse environmental consequences will occur as a result of the construction and operation” of the pipeline. The report noted a lack of publicly available information from Kinder Morgan, both about the route of the pipeline and about the environmental impacts of the pipeline, which the city says limited its ability to precisely calculate potential risk for future contamination.

In October of 2019, the City of Austin, Texas filed a Notice of Intent to sue Kinder Morgan, joining opposition already being mounted by the cities of San Marcos and Kyle, the Barton Springs Aquifer Conservation District, and a property-owner group called the TREAD Coalition. City of Austin environmental officer Chris Herrington says the city is protecting two endangered species, the Austin blind salamander and the Barton Springs salamander. Herrington says the pipeline project could hurt or kill these animals, arguing that Kinder Morgan did not follow the necessary steps under the U.S. Endangered Species Act to permit the project. Specifically, Kinder Morgan needs to apply for a permit from the U.S. Fish and Wildlife Service to build the pipeline over the Edwards Aquifer Recharge Zone.

In February of 2020, a Texas federal judge rejected the City of Austin and others’ request to block early construction work on the pipeline, deciding that the potential harm to the endangered golden-cheeked warbler did not warrant an immediate work stoppage.

In July 2020, during pipeline construction work, approximately 100 gallons of drilling fluid bubbled up close to the Pedernales river, roughly six miles southwest of Fredericksburg. According to Kinder Morgan, the river was not affected. The Houston Chronicle reported that this incident followed an accident earlier in 2020 along a section of the project in nearby Blanco County which was said to have resulted in a mixture of nontoxic bentonite clay and water seeping into drinking-water wells used by landowners.

Property Opposition

In July of 2019, Kinder Morgan filed a lawsuit against the city of Kyle, claiming that a recently passed pipeline safety ordinance violates federal and Texas law. Kinder Morgan also called for a pause to the enforcement of the city’s ordinance while this case is being sorted out in court. On July 2, 2019, the Kyle City Council passed the ordinance, which requires that pipelines passing through their city be at a certain depth. Travis Mitchell, the Mayor of the city of Kyle, stated that the ordinance was passed to keep the residents of Kyle safe and to proactively hinder Kinder Morgan's progress.

In August of 2019, the Blanco County panel ordered Kinder Morgan to pay $2.7 million USD to three landowners in exchange for seizing parts of their properties under eminent domain for the proposed Permian Highway Pipeline. The landowners claimed the company offered less than $21K to seize parts of their properties, which they said would not compensate them for losses in property value. However, in June of 2019, Judge Lora Livingston with the 261st State District Court in Austin, dismissed a different set of claims made against the pipeline. Two landowners, a trust, the City of Kyle and Hays County sued Kinder Morgan, one of its subsidiaries, the Railroad Commission of Texas and five agency executives over the pipeline in April, citing environmental concerns.

In March of 2020, residents of Blanco County, Texas reported that muddy water was coming from their home water taps. The residents are located downstream from where the Permian Highway Pipeline's construction is occurring in the Blanco River. Officials in Blanco County are sampling water from drinking wells, asserting that construction workers “lost circulation” during the drilling process, causing drilling fluid to spread.

In June 2020, the Wimberley Valley Watershed Association (WVWA) and Trinity Edwards Springs Protection Association (TESPA) filed a lawsuit against developers for violations of the federal Safe Drinking Water Act, asking for the company to clean up as best it can after a March 28 spill fouled a number of drinking water wells. The lawsuit also asked developers to agree to stop their use of a drilling chemical that contains known human carcinogens.

Financing

The approximately US$2 billion project reached financial close in September 2019. It received debt financing totalling US$545 million from MUFG, CoBank, Commonwealth Bank of Australia, Crédit Agricole, Intesa Sanpaolo, Korea Development Bank, Mizuho, Sumitomo Mitsui, Société Générale and Kookmin Bank.

Expansion projects

Capacity expansion

On 25 April 2022, Kinder Morgan announced a binding open season for a capacity expansion project with an expected in-service date of 1 October 2023.

The project involved capacity expansion by approximately 550 Mmcf/day. The expansion project would provide an outlet for increased natural gas production from the Permian Basin to growing market areas along the U.S. Gulf Coast, including new LNG facilities expected to begin service in the next few years. The project involved additional compression on Permian Highway Pipeline to increase natural gas deliveries from the Waha area to multiple mainline connections, Katy, Texas, and various U.S. Gulf Coast markets; additional new compression locations on the pipeline in Texas; modifications to the existing compressor facility in Pecos County, Texas; and approximately 15 miles of looping: five miles in Reeves County and Pecos County, Texas and 10 miles in Lavaca County, Texas.

Kinder Morgan reached FID for the project in June 2022. The project was brought into service on December 1, 2023.

• Operator:
• Owner: Permian Highway Pipeline LLC
• Parent company: Kinetik Holdings [53.3%]; Kinder Morgan [26.7%]; ExxonMobil [20%]
• Capacity: 550 MMcf/d
• Length: 15 miles / 24 km
• Diameter:
• Status: Operating
• Start year: 2023
• Cost: US $450 million
• Financing:
• Associated infrastructure: