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Kinder Morgan, DCP Midstream and Targa to develop Gulf Coast Express pipeline project

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World Pipelines,

Kinder Morgan Texas Pipeline LLC (KMTP), a subsidiary of Kinder Morgan, Inc., DCP Midstream, LP (DCP Midstream) and an affiliate of Targa Resources Corp. (Targa) has announced they have signed a letter of intent with respect to the joint development of the proposed Gulf Coast Express Pipeline Project (GCX project), which would provide an outlet for increased natural gas production from the Permian Basin to growing markets along the Texas Gulf Coast.

The participation of the three parties involved with the GCX project is subject to negotiation and execution of definitive agreements among KMTP, DCP Midstream and Targa. As part of the definitive agreements, Targa and DCP Midstream would commit significant volumes to the proposed project, including certain volumes provided by Pioneer Natural Resources Company (Pioneer), a joint owner in Targa’s WestTX Permian Basin system and one of the largest producers in the Permian Basin.

The capacity of the GCX Project is expected to be approximately 1.92 billion ft3/d and would include a lateral into the Midland Basin, consisting of approximately 50 miles of 36 in. pipeline and associated compression to serve gas processing facilities owned by Targa, as well as facilities owned jointly by Targa and Pioneer. The expected in-service date of the pipeline continues to be scheduled for the second half of 2019, pending the timely completion of definitive agreements with shippers and a final investment decision by the three parties. Per the terms of the letter of intent, KMI would build, operate and own a 50% interest in the GCX project, and DCP Midstream and Targa would each hold a 25% equity interest in the project.

“We are thrilled to have Targa join DCP Midstream and Kinder Morgan in developing the project and to add both Targa and Pioneer as major customers on the proposed system,” said Kinder Morgan Natural Gas Midstream President Duane Kokinda. “With DCP Midstream and Targa, we now have two of the premier gathering and processing supply aggregators in the Permian Basin on board, as well as one of the Basin’s largest producers with Pioneer. The commitments of these parties confirm our premise that combining supply source optionality in the Basin with unparalleled market access on the Agua Dulce end provides an attractive takeaway solution for the parties developing natural resources in the Permian Basin.”

“We are excited to have the opportunity to expand our portfolio of integrated assets and customer offerings in the Permian which would complement our Sand Hills expansions,” said Wouter van Kempen, Chairman, President and CEO of DCP Midstream. “This is a strong collaboration of players that draws upon our combined capabilities to provide a competitive and capital efficient solution to the industry.”

“We are excited to be joining KMI and DCP Midstream in the development of the GCX Project. Given our significant Permian Basin footprint, continuing to provide our customers with flexibility and access to premier markets is always our focus, and we believe that the GCX Project would further enhance those capabilities,” said Joe Bob Perkins, CEO of Targa.

It is anticipated that natural gas supply would be sourced into the project from multiple locations, including existing receipt points along KMI’s KMTP and El Paso Natural Gas pipeline systems in the Permian Basin, a proposed interconnection with the Trans-Pecos Pipeline, and additional interconnections to both intrastate and interstate pipeline systems in the Waha area. Deliveries of natural gas into the Agua Dulce area would include points into KMTP’s existing Gulf Coast network, KMI-owned intrastate affiliates (KM Tejas and KM Border pipelines), the Valley Crossing pipeline, the NET Mexico header, and multiple other intrastate and interstate natural gas pipelines.

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