Double E expansion fueled by rising demand, prices

Growing demand for natural gas, beneficial commodity pricing and Permian Basin geology have put Summit Midstream in growth mode.

Summit recently extended open season on its Double E pipeline to June 30 and executed two new long-term firm transportation agreements totaling 150 million cubic feet of natural gas per day. The two agreements bring total Double E open season commitments to 250 MMcf per day and total contracted capacity to approximately 1.9 billion cubic feet per day.

"Commodity pricing has been beneficial for our customers and is showing up in funding," said Chris Tennant, senior vice president and chief commercial officer at Summit. "We're entering the age of artificial intelligence and data centers," he added.

Juan Cardona, director of business development, noted that Permian Basin development activity is moving north into New Mexico, where producers have found good rock and drilled wells that are producing healthy amounts of natural gas.

In that region, from Carlsbad, New Mexico, east to the state line, he said new infrastructure, including processing plants and gathering lines, is being built. But there have been significant constraints once production gets to the Waha hub, where takeaway capacity has been pretty limited.

"They need the Double E to get out of the production site to Waha and into transmission lines," Cardona said.

Added Tennant, "On the north side of our system, Double E is the only large-scale gathering system in the northern Delaware Basin. There's a lot of drilling and expansion."

Tennant also noted that in the recent federal lease sale, Summit customers, including Occidental Petroleum and Matador Resources, purchased significant acreage in that area.

"Development is prolific and that gas has to be processed," he said. "This rapid development has caused gas supply forecasts to increase. These customers who have talked with us say we need to expand and they need to get their gas to market and the market begins at Waha."

Cardona cited new projects, including the newly built Hugh Brinson pipeline and expansions to Magellan and Eiger. "In reality, there are seven takeaway pipelines producers will get access to through Double E. There is easily 8 to 9 billion cubic feet of capacity on paper, maybe more."

The Permian Basin remains a crude basin, but the rising amounts of associated natural gas create a need for solutions, he said.

"I feel the Permian Basin is coming together and there are good solutions coming. Overall, this is a phenomenal story for Double E but, bigger picture, it's a good Permian Basin story," said Cardona.

The company also expects to make a final investment decision on Double E compression expansion by the end of summer. The expansion project would increase the pipeline's capacity by approximately 50%, from approximately 1.6 Bcf per day to approximately 2.4 Bcf per day. The company recently executed a purchase order to acquire gas turbine compressors, securing the long-lead-time equipment necessary for the project and maintaining the company's targeted end-of-2028 in-service date.

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