New Permian Basin to Agua Dulce natural gas pipeline reaches FID

The Permian Basin is set to receive a much-needed boost to natural gas exit capacity in the second half of 2026 as a new 2.5 Bcf/d long-haul pipeline to Agua Dulce has reached a final investment decision.

Private firm WhiteWater Midstream will construct and operate the 365-mile, 42-inch diameter Blackcomb Pipeline, it announced late July 31. The second half of 2026 start date is subject to "the receipt of customary regulatory and other approvals," it said.

Blackcomb is 70% owned by WPC, the joint venture that also owns Whistler Pipeline. Targa Resources owns 17.5% of Blackcomb, and MPLX owns the remaining 12.5%, incremental to its ownership interest in WPC, WhiteWater said.

Firm transportation agreements have been secured with shippers including Devon Energy, Diamondback Energy, Marathon Petroleum and Targa Resources.

"Bringing Targa's volumes to the table got it across the line to go to FID," Targa Chief Commercial Officer Robert Muraro said Aug. 1 during the company's second-quarter earnings call. The company was excited to get "takeaway out of the Permian for 2026 done and launched," he said.

But Targa is not ruling out divesting its stake at a later date. "We will always look to do what's in the best interest of the shareholders, whether it's holding a minority interest or monetizing it," CEO Matthew Meloy said during the call.

Negative pricing risk

Market participants have been increasingly wary of a repeat of the current bout of negative prices in 2026 once the 2.5 Bcf/d Matterhorn Express Pipeline fills up.

Production has been testing the limits of exit pipeline capacity in the Permian Basin, making cash prices in West Texas extremely sensitive to any pipeline maintenances or outages.

Matterhorn will relieve pricing pressure when it begins service later in 2024. But analysts

it to fill within two years. Matterhorn is also being developed by Whitewater, along with MPLX, Devon Energy and EnLink Midstream.

"It's much needed for the industry, much needed for the basin," Meloy said of Blackcomb. "So we were excited to put a commitment on there and push this past FID and get going on this."

Permian Basin production picked up at the end of 2023 as two new brownfield expansions added around 1 Bcf/d of exit capacity, but has stalled around the 19 Bcf/d mark in 2024, according to S&P Global Commodity Insights data.

Wellhead to water strategy

Supply for Blackcomb "will be sourced from multiple upstream connections in the Permian Basin, including gas processing facilities in the Midland Basin and the Agua Blanca Pipeline in the Delaware Basin, a joint venture between WhiteWater and MPLX," WhiteWater said.

The WPC joint venture is targeting increased LNG export demand in South Texas. After Enbridge joined the JV in March, executives said it would give the company a footprint in the Permian and allow it to better supply LNG customers. MPLX CEO said the JV served its "wellhead-to-water growth strategy."

WPC owns 100% of the Rio Bravo project that Enbridge is developing. According to the Enbridge website, the 137-mile project is due to enter service in 2026 and will provide 100% of the gas to supply Next Decade's Rio Grande LNG export facility in Brownsville, Texas. NextDecade reached FID in July 2023 on the first 17.6 million mt/year phase of Rio Grande.

The JV also owns the 2.5 Bcf/d Whistler Pipeline, which runs from the Permian Basin to Agua Dulce, and 70% of the new 1.7 Bcf/d Agua Dulce Corpus Christi Pipeline, which began service July 1. ADCC runs around 40 miles from Whistler Pipeline's Agua Dulce Header to Cheniere's Corpus Christi LNG export facility. In June, a senior executive at Cheniere said the 10 million mt/year expansion of Corpus Christi was still on track to start producing LNG by the end of 2024.