Oil producers in West Texas will have to wait a little longer for the Matterhorn Express Pipeline, a key relief valve for their excess associated petroleum gas, even if another major diversion project gets the green light.

WhiteWater Midstream’s 490-mile, 2.5 billion cubic feet per day Matterhorn Express from Waha to Katy was supposed to be flowing gas by now, but some last-minute construction delays have pushed that schedule back a bit. “We expect the pipeline to be operational in September,” CFO Ben Lamb of joint venture partner EnLink Midstream told investors during the company’s second-quarter earnings call. “Overall, that’s a very minor delay. Part of it was actually weather-related and due to Hurricane Beryl.”

The delay comes as the rise in associated gas in the Permian Basin is once again outpacing the region’s capacity to transport it to markets on the Gulf Coast and elsewhere, often driving spot prices at the Waha Hub into negative territory – meaning producers are paying customers to take their production. Even when Waha prices return to positive territory, they are consistently significantly lower compared to those at the Henry Hub, the benchmark price.

That dynamic has forced the region’s normally gas-price-agnostic oil producers to react. “We obviously saw a lot of gas price weakness throughout the second quarter,” Diamondback Energy CEO Travis Stice told analysts earlier this month. “So we brought some of our highest gas-to-oil ratio wells online for a month or two to mitigate that pressure. Despite that, the gas curve continues to exceed expectations. We even curtailed a little bit of oil to make sure our gas production was a little lower in the quarter, which we kind of continued in the third quarter.”

Altered currents

East Daley Analytics forecasts that Matterhorn Express volumes will increase to 1.5 Bcf/d by year-end and that flows will reach the line’s capacity of 2.5 Bcf/d by March 2025.

“What I find really interesting about Matterhorn is what impact it will have on the Houston and Katy markets,” said East Daley analyst Alex Gafford during a webinar last week. “Matterhorn has the potential to cause an oversupply of gas at the Katy Hub because there are no new demand valves to accommodate the 2.5 Bcf/d of new gas. We expect the market to respond by repricing the Houston Ship Channel and redirecting flows that have previously flowed south from Carthage to Katy back to Carthage.”

Gafford estimated the Carthage-Houston Ship Channel’s volume historically has been about 5 Bcf/d. “We forecast that route to be significantly less busy after the Matterhorn. We expect the market to respond and force that by lowering prices in the Houston Ship Channel to create that volume movement,” he said.

But with gas demand in Mexico increasing and liquefied natural gas projects and infrastructure coming online in South Texas after 2027, “the Carthage-Katy route will need to be replenished,” he added.

“Blockbuster project”

Meanwhile, another project led by WhiteWater Midstream has upended the competition among pipeline companies to address the next offtake capacity crisis in the Permian Basin.

The Company and its partners announced that they have made a final investment decision (FID) for a new long-haul pipeline that will transport 2.5 Bcf/d of associated gas to the Agua Dulce area of ​​South Texas. The 365-mile-long, 42-inch-thick Blackcomb Pipeline is expected to be commissioned in the second half of 2026, subject to regulatory approvals.

“The blockbuster project … could end the competition for new expansions after the Matterhorn pipeline,” East Daley said. “The Blackcomb route appears to follow a similar path to the Whistler pipeline; Whitewater has experience with this route, which increases our confidence in the proposed start-up date.”

The company noted that Blackcomb is the fifth proposed project, but the first to reach the FID after Matterhorn. Others include Energy Transfer’s 260-mile, 1.5-2 Bcf/d Warrior Pipeline, which would connect the Permian to the company’s infrastructure southwest of Fort Worth, Texas; Targa Resources’ 563-mile, 2 Bcf/d Apex Pipeline, which would transport gas southeast from Midland County to Jefferson County; and Moss Lake’s DeLa Express rich gas pipeline. Meanwhile, Kinder Morgan is in talks with customers about expanding its Gulf Coast Express system.

Blackcomb is 70% owned by the WPC joint venture, consisting of WhiteWater Midstream, MPLX and Enbridge, and 17.5% owned by an affiliate of Targa Resources. WhiteWater Midstream will build and operate the pipeline.

The FID follows the partnership entering into “sufficiently firm transportation agreements with predominantly investment-worthy carriers,” including Devon Energy, Diamondback, Marathon Petroleum and Targa.

Not all competing projects are likely to come to fruition. “Because the Permian is chronically constrained … producers would need to increase drilling more than we anticipate and crude pipelines would need to be expanded to raise the cap on oil-driven growth and fill Blackcomb,” East Daley said. “Targa’s involvement in Blackcomb likely kills hopes for the Apex project.”