Permian Gets Gas Relief as ADCC Pipeline Begins Commercial Service

Editor's note: This article has been updated with additional analyst commentary.

The 1.7 Bcf/d ADCC Pipeline began commercial service at the start of the third quarter, connecting Permian Basin natural gas to Cheniere's Corpus Christi LNG export facility.

The 40-mile natural gas line runs from the terminus of the Whistler Pipeline in Agua Dulce, Texas, and provides Cheniere with direct access to Permian and Eagle Ford Shale volumes in addition to gas sourced along the Gulf Coast, according to a July 12 press release.

The pipeline, which officially started service on July 1, is designed to be expandable to 2.5 Bcf/d.

The 40-mile, 42-inch line is expected to help reduce flared volumes in the Permian Basin and further support U.S. LNG exports to global markets. East Daley Analytics said it does not expect a big shift in basin dynamics given that Whistler Pipeline already runs full at about 2.5 Bcf/d.

Alex Gafford, an analyst at East Daley, said the ADCC Pipeline is designed to transport to support Cheniere’s Stage 3 expansion at Corpus Christi with supply connections into Whistler and Agua Dulce hub.

“Cheniere is building seven midscale trains capable of producing over 10 Mtpa of LNG (~1.3 Bcf/d),” Gafford said in an email. “In Cheniere’s 1Q24 earnings update in May, executives said the CCL Stage 3 expansion is on track to make first LNG by YE24, and predicted that all seven trains would be brought into service over the 2025-26 period.”

The ADCC line will give Cheniere more flexibility to source gas at Corpus Christi, particularly in in the second half of 2024 and early 2025, when demand from the Stage 3 expansion is unavailable.

Currently, the facility is only served by the Corpus Christi Pipeline.

“The new pipe will move Permian gas further downstream via Whistler and provide access to Eagle Ford supply at the Agua Dulce hub,” he said. 

However, East Daley does not expect a big shift in basin dynamics with ADCC online, given that Whistler Pipeline already runs full at ~2.5 Bcf/d to Agua Dulce, Gafford said.

“Looking further out, we expect new LNG demand from projects like CCL Stage 3 will create big shifts in the South Texas market later this decade,” he said. “However, Matterhorn pipeline is expected to start taking line fill this month and be fully operational by September adding 2.5 Bcf/d of egress from the Permian into the Katy market.”

Matterhorn will provide much needed egress from the Permian and will lift Waha pricing out of the negatives through 2026.

The ADCC Pipeline 70% owned by Whistler Pipeline LLC, a joint venture between WhiteWater (50.6%), MPLX LP and Enbridge (19%). The remaining 30% is wholly owned by Cheniere.