DT Midstream Inc. (DTM) has boosted the top end capacity estimate for its Louisiana Energy Access Project, or LEAP, to 4 Bcf/d, roughly double the amount of natural gas it could be transporting by 2026.
Based on the work to expand LEAP, “it’s become clear to us that we actually can expand this beyond 3 Bcf/d up to the 4 Bcf/d neighborhood,” CEO David Slater said during the fourth quarter earnings call.
The Detroit-based company completed a second expansion in January. A third phase would raise the capacity to 1.9 Bcf/d by the second half of the year. The 150-mile, 36-inch diameter pipeline carries Haynesville Shale natural gas in Louisiana to the Gulf Coast for LNG exports and industrial use.
LEAP is one of eight pipeline projects underway through the end of the decade to advance an additional 10.7 Bcf/d for liquefied natural gas export terminals. Litigation over pipeline crossings in Louisiana has thrown up some roadblocks, but Slater said LEAP is unaffected.
“We have no limitations on that right now, like some other projects have, so we have a clear runway to expand on a relatively short notice,” Slater said.
DTM is in “advanced discussions” for a fourth phase on LEAP that would add between 200 MMcf/d to 400 MMcf/d by 2026, Slater said. LEAP’s connections to supply points and market areas from the Haynesville were “driving the conversation more than some of the drama that’s unfolding in the basin with some other pipelines,” according to Slater.
‘Very Aware’ Of Prices
Henry Hub front-month futures prices have shed more than half their value since falling below the $3/MMBtu level in mid-January, trading as low as $1.522 on Tuesday (Feb. 20), a nearly three-decade low outside a brief dip during the height of Covid-19. NGI’s Spot Gas National Avg. had fallen by 24% in February to $1.585 on Tuesday.
“We’re very aware of the current price environment,” the CEO said. “We are very close to all of our customers and their plans,” he said when asked whether there had been any production shut-ins across the operational footprint in the Haynesville or the Northeast.
The exploration and production customer plans are baked into DTM’s 2024 outlook, he said. “We’ve certainly calibrated to…the current realities in the commodity space that may affect some of our customers.”
One customer, Chesapeake Energy Corp., plans to slash spending and gas production. Slater said he expects Chesapeake’s planned merger with Southwestern Energy Co. to improve drilling efficiencies and create incremental opportunities.
The energy sector remains “in a consolidation mode,” with “lots of assets in the market, lots of activity happening in space,” Slater said. “I don’t think that’s going to abate.” DTM management is aware of “bolt-on opportunities around us” and would pursue them if they make sense, he said.
In 2024, DTM plans to direct $300-375 million in capital expenditures for growth projects. Last year the company spent $677 million.
In the fourth quarter, an expansion was completed for the Blue Union gathering system and treating system in Louisiana. Phase two of an expansion for the Appalachia Gathering System also was finished, which added 150 MMcf/d of mainline capacity. In Ohio, an initial trunkline for a Utica Shale gathering project was also completed.
This year DTM expects to complete a 1 Bcf/d LEAP Gillis Access interconnect and a Carthage area connection in Louisiana.
DTM has a backlog of $1.3 billion in growth projects through 2027. It includes expansions of the Tioga and Appalachia gathering systems in 2025, and an Ohio Utica buildout by 2026. It is in discussions with shippers to expand the Millennium Pipeline Co. LLC in 2028, Slater said.
DTM reported fourth quarter net income of $121 million ($1.24 cents/share), up from $85 million (88 cents) a year earlier. For the full year, it reported net income of $384 million ($3.94/share), versus $370 million ($3.81) in 2022.
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