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Kinder Morgan Wins Case for Gas Pipeline

A Texas judge has ruled the Texas Railroad Commission does not have to approve the route of natural gas pipelines, which will allow Kinder Morgan to proceed with a US$2-billion natural gas pipeline project by using eminent domain to take the land it needs for the pipe.

Reuters quoted Judge Lora Livingston as saying in the ruling, “The court finds no authority for the proposition that the legislature has granted authority to the Commission to oversee the rights granted,” and dismissed Kinder Morgan from the case that was brought in front of her by a group of landowners and state officials who sought to block the pipeline project.

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The Permian Highway pipeline will have a capacity of 2 billion cu ft daily that it will carry to the Gulf Coast refineries, relieving a shortage in the Permian that has depressed not just oil prices but also gas prices as a lot of the associated gas produced from the shale formation cannot be transported or used or stored.

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It was also because of this shortage of gas pipelines that gas flaring in the Permian hit a record high in the first quarter of the year, according to a report by Rystad Energy. It reached 661 million cu ft daily with the research firm noting, “This widespread waste of a valuable commodity is the result of persistent infrastructure challenges, a lack of sufficient takeaway capacity and an unexpected outage on a key pipeline in the area.”

While the news about Kinder Morgan’s project is good, the pipeline will not be built overnight, so the shortage-caused problems will persist for a while longer. Later this year, in October, another 2-billion-cu-ft gas pipeline should be completed in the Permian—the Gulf Coast Express—and it should alleviate some of the pressure on gas prices. However, gas production is rising, with the total from shale plays seen at 81.4 billion cu ft daily next month.

By Irina Slav for Oilprice.com

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