Targa, Kinder Mor­gan team up to build pipe­line

Houston Chronicle Sunday - - BUSINESS - By Jor­dan Blum jor­dan.blum@chron.com twit­ter.com/jd­blum23

Hous­ton pipe­line com­pa­nies Targa Re­sources and Kinder Mor­gan are team­ing up to build the Gulf Coast Ex­press Pipe­line to move nat­u­ral gas from West Texas’ Per­mian Basin to the Cor­pus Christi area.

Targa is buy­ing a 25 per­cent stake in the Kinder Mor­gan-led project. At the same time, Targa agreed to sell 25 per­cent of its pro­posed Grand Prix nat­u­ral gas liq­uids pipe­line that treks from the Per­mian to just east of Hous­ton in Mont Belvieu. Pri­vate eq­uity gi­ant Black­stone En­ergy Part­ners is ac­quir­ing the stake in Grand Prix.

Both deals ap­pear to help Targa di­ver­sify in the boom­ing Per­mian with­out spend­ing much of ad­di­tional money, although the com­pa­nies did not dis­close the ac­qui­si­tion costs.

There are at least 15 projects to ex­pand or con­struct oil or gas pipe­lines that will tra­verse most of Texas from the Per­mian Basin to Hous­ton, Cor­pus Christi and Beau­mont. These projects rou­tinely cost more than $1 bil­lion each.

Kinder Mor­gan will build the Gulf Coast Ex­press Pipe­line and still own 50 per­cent of it. An ex­ist­ing part­ner, Den­ver­based DCP Mid­stream, holds the re­main­ing 25 per­cent. DCP was founded by Hous­ton com­pa­nies Phillips 66 and Spec­tra En­ergy, which was ac­quired last year by the Cana­dian pipe­line com­pany En­bridge.

The roughly 430-mile gas pipe­line project is ex­pected to be com­pleted by late 2019.

As part of the deal with Kinder Mor­gan, Targa and DCP are com­mit­ting to trans­port sig­nif­i­cant vol­umes of gas on the pipe­line, in­clud­ing from Pioneer Nat­u­ral Re­sources. Pioneer is one of the Per­mian’s largest nat­u­ral gas pro­duc­ers.

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