Targa, Kinder Morgan team up to build pipeline

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.