EnLink Midstream (ENLC) executives expect the Matterhorn Express Pipeline to begin operations in September, an executive said during the company’s second-quarter earnings conference call on Aug. 7.
The long-awaited pipeline, which will provide much-needed natural gas egress out of the Permian Basin, had been expected to start operation at some point in the summer.
The opening will come about two weeks later than anticipated. Construction was most recently delayed by Hurricane Beryl, which hit the Houston area on July 8.
CFO Ben Lamb said earnings from the Matterhorn operation would show up in the next quarter’s reports. He added that WhiteWater Midstream had been an excellent partner on the line and the company was happy with the investment. WhiteWater will operate the line.
The Matterhorn Express is a joint venture that, along with EnLink and WhiteWater, includes Devon Energy and MPLX.
As designed, the pipeline has a capacity of 2.5 Bcf/d. The 490-mile line will deliver natural gas from the Midland and Delaware basins to Southeast Texas.
The amount of gas produced in the Permian region has been rising as the oil plays in the basin are developed. Producers in the Midland and Delaware basins focus on oil with associated gas treated as a by-product. That’s led to gas takeaway constraints as volumes outran pipeline egress capacity in 2023. In 2024, natural gas prices at the Waha hub, which handles most natural gas produced in the area, have frequently dropped into negative territory.
During EnLink’s conference call, executives were asked if there was a pent-up supply of natural gas in the area waiting to be shipped, or whether the Matterhorn’s transport totals would slowly ramp up along with further development in the Midland and Delaware basins.
“I think it's going to fill pretty quickly,” Lamb said.
Gas expansion
During the earnings call, EnLink also announced a final investment decision (FID) for the $85 million expansion project of the Jefferson Island Storage Hub (JISH). The facility is close to the Henry Hub natural gas pricing gate and regional supply and demand points, said Dilanka Seimon, EnLink’s chief commercial officer.
The company said the JISH project is backed by a strong commercial interest and investment-grade credit customers under long-term contracts.
The expansion will bring storage capacity at the facility to 10 Bcf from 2 Bcf. EnLink expects to be able to open the new storage hub in 2028. Overall, the company’s storage capacity will increase to 20 Bcf. Annualized EBITDA from the project should be about $20 million, according to Capital One analysts.
For the quarter, EnLink reported a net income of $67 million, a decrease of $23 million over the same period in 2023 — but a $17 million increase over first-quarter 2024. Adjusted EBITDA for the second quarter was $306 million.
“While the quarter missed our expectations, ENLC continues to return capital to shareholders and FID another project, which should have a high degree of recurring revenue,” according to a Stifel analysis of the company’s quarterly results.