Energy Transfer LP is expecting to make a final investment decision (FID) within months on the proposed 1.5-2.0 Bcf/d Warrior Natural Gas pipeline to move supply from the Permian Basin.
Shipper interest in the project “has picked up steam,” Co-CEO Marshall McCrea told analysts during the Dallas-based midstreamer’s second quarter earnings call. “There is a tremendous market east…heading through Texas and other parts of the country really. And so we’re very excited about where we sit on Warrior and I’ll just say it, I’ll be disappointed…if we’re not announcing FID by our next earnings call.”
The 42-inch diameter pipeline, if sanctioned, would stretch 325 miles from the Permian to interconnect south of Dallas. There, the system can access Gulf Coast hubs including Katy, Beaumont, the Houston Ship Channel, and the Gillis and Henry hubs.
McCrea said if Warrior is sanctioned, “it will be fully sold out. We’re not going to take any risk on overbuilding out of that basin, but there’s still a lot of gas and oil growth for many years to come out of that basin, in our opinion.”
The company is anticipating robust growth in natural gas demand overall throughout North America, according to McCrea and co-CEO Thomas Long.
“With forecasts for electricity demand growth becoming increasingly bullish, and the need for grid reliability becoming progressively more important, it is clear that natural gas will play a significant role in helping meet this demand,” said Long. “Given Energy Transfer’s extensive interstate and intrastate natural gas pipeline footprint, we believe we are extremely well positioned to benefit from the anticipated rise in natural gas needs.”
He said the company serves gas-fired power plants in 15 states, “and we have recently signed deals across our systems to provide gas loads of over 500,000 MMBtu/d.”
Eight gas-fired power plants have been approved with capacity of 10 MW each “to support the partnership’s operations in Texas. We continue to expect these facilities to go into service throughout 2025 and 2026. These facilities are expected to increase system reliability for Energy Transfer and for our customers.”
McCrea added, “We keep hearing about transition…well I guess everybody’s kind of seeing the truth. The transition is, we’re about to transition into untold demand for natural gas.”
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Energy Transfer is in discussions with several data centers of varying sizes across the pipeline and storage network, McCrea noted. Many want to install power generation onsite, and are wanting as much as 200,000 or 300,000 Mcf/d of gas supply for each one.
“So it’s an enormous opportunity for us,” he said. “We’re very advantaged in many of these areas to capture a lot of this business as well as for the power plant demand for natural gas…We think we could increase the demand here for electricity over the next six to eight years by 30,000 or 40,000 MW at least here just in Texas.”
Other Energy Transfer growth projects under development include the Lake Charles LNG export terminal, a carbon capture and sequestration project, and blue ammonia hubs at Lake Charles and the Nederland crude oil storage terminal, Long said.
The results follow the closing in July of Energy Transfer’s acquisition of WTG Midstream Holdings LLC for $2.28 billion in cash and about 50.8 million newly issued ET common units. The transaction added about 6,000 miles of natural gas gathering pipelines in the Permian’s Midland sub-basin. “There’s enormous growth in that part of the Midland Basin that we have had little exposure to on the gas side,” said McCrea.
Energy Transfer reported net income of 1.31 billion (35 cents/unit) for 2Q2024, compared with year-ago profit of $911 million (25 cents). Revenue totaled $20.7 billion, from $18.3 billion.
