Q1 2022 Kinder Morgan Inc Earnings Call
Good afternoon, and welcome to the quarterly earnings Conference call. At this time I would like to inform all participants that today's call is being recorded if you have any objections. You may disconnect. At this time you have been placed on a listen only mode until the question and answer session of today's call. If you would like to ask a question at that time. Please press star one.
On your phone please make sure your phone is muted and record your name and company name clearly when prompted.
I would now like to turn the call over to Mr. Rich Kinder executive Chairman of Kinder Morgan. Thank you Sir you may begin.
Thank you Michelle before we begin I'd like to remind you as I always do they care about earnings release today and this call.
Forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, and the Securities and Exchange Act of 1930 score as well as certain non-GAAP financial measures before making any investment decisions. We strongly encourage you to read our full disclosure on forward looking statements.
And use of non-GAAP financial measures set forth at the end of our earnings release as well as review our latest filings with the SEC for important material assumptions expectations and risk factors that may cause actual results to differ materially from those anticipated and described in such forward looking.
Statements.
Let me begin by today, we formally announced our dividend increase for 2022, taking the annual payout to $1 11 and says that's the fifth consecutive annual increase.
Also as Steve and the team will tell you the year is off to a good start.
But I wanted to talk about broader issues could impact all of us since our last call in January seismic events have occurred.
Russia, an invasion of Ukraine has shaken the world order as we know it with a dramatic impact on the economy of Europe , and indeed, the entire world.
Predicting how this whole tragic situation will be finally resolved as far beyond my capabilities, but I'm pretty certain.
Back on the energy segment of the economy will be significant at least over the next several years.
This crisis has demonstrated the continued dependence of the world.
Fossil fuels, especially natural gas and the inability to develop a satisfactory substitute in the short to intermediate term.
This situation is illustrated by the sporadic efforts of Europe . The win itself from its overwhelming reliance on Russia and natural gas.
That we are showing once again.
The world market is for oil natural gas Ngls and even coal as we look at the dramatic escalation in prices since the war began in late February .
What does this mean for the energy space in America.
My judgment the crisis plays to our strikes the U S. As a reliable supplier with the ability to grow its production modestly in the near term and more robustly in the intermediate term.
We operate under a transparent legal system and we have technical expertise from the wellhead to burner tip that is unmatched anywhere in the world.
For all these reasons the United States will be a major part of the solution to adequately supply the world with oil and natural gas it needs to surmount depression problem in.
In particular, the U S will be a major supplier of additional LNG to Europe .
Place at least in part Russian gas.
I anticipate that all of our present LNG export facilities will be running at capacity for the foreseeable future and the contracts necessary to support the construction of new facilities in the next few years will be more attainable than they've been in the past.
By way of caution still concern that our federal government will not properly expedite the permitting of these new facilities, but I'm reasonably hopeful that at some point. This administration will recognize the importance of playing its energy card to support its allies and sanctioned it's adversaries.
The impact of these developments will benefit the midstream energy segment and Kinder Morgan specifically in both the short term and the long term at Kinder Morgan, we move about 40% of all the natural gas in America, and about 50% of the gas going to LNG export terminals.
As volumes increased throughput will increase as will the need for selective expansions and extensions of the network in short it's a good time to be long natural gas infrastructure Steve.
Alright, thanks rich.
So after wrapping up a record year financially in 2020 , one we're off to a strong start in 2022 with strong performance in our base business and attractive opportunities to add growth.
Keeping our balance sheet strong exceeded our plan in the first quarter and even though it's early in the year, we are projected to be above plan for the full year.
In addition to commodity price tailwind, we experienced very strong commercial performance in our gas business with continued improvement in our contract renewals, especially on our flexible gas storage services. Good performance during the winter and new emerging project opportunities in our Bakken Haynesville in Altamont assets an increase.
<unk> interest in new Permian transportation capacity on the Permian, we are working on the commercial commercialization and development of compression expansions on our P. H P. I G CX pipelines.
We will need to do a small amount of looping most of the expansion can be accomplished with additional horsepower.
Compression expansions are low risk from a siting and permitting perspective, and they are very capital efficient. So they do come with a higher fuel right for the customer.
Most importantly in today's environment compression expansions allow for speed to market.
Once we have contracts and make F. I D. We believe we can get to in service in about 18 months.
We believe the market will need that capacity in that time frame and see one or both of these expansions as the near term solution pushing out our potential Greenfield third pipeline further in time.
Combined the two expansions can add 1.2 Bcf per day of capacity out of the Permian.
Finally for gas, our stagecoach storage asset, which we acquired in 2021 helped us with our strong winter performance and continues to perform above our acquisition model our.
Our C O two business was aided by commodity prices and also operational outperformance versus our plan we continued.
To advance our three renewable gas projects, which we picked up in the kinetics acquisition last year and we are advancing additional opportunities in our energy transition ventures group.
Our products pipelines were modestly above plan for the quarter and while terminals missed plan by a bit we started to see good recovery in our Jones Act charter rates and continued strong performance in our bulk terminals business.
The balance of the year commodity prices continue as a tailwind and we have locked in enough such that our updated sensitivity is about $4 million per one dollar movement of W. T. I, we expect continued strength in our base business, but we also expect to experience some negative impact from cost pressures due both to.
It'll maintenance and integrity work that we added to the plan for this year.
As well as some higher costs on certain materials chemicals parts and vehicle fuel still taken all of this into account. We are predicting that we will be above plan for the year in summary, we're doing very well with that I will turn it over to Kim Thanks, Dave I'll go through the segments, starting with natural gas.
Our transport volumes were up 2% or approximately <unk> 9 million <unk> per day versus the first quarter of 2021.
And that was driven primarily by increased LNG deliveries generally colder weather, partially offset by the continued decline in Rockies production and a pipeline outage on E. P. N G <unk>.
Celebrities to LNG facilities off of our pipes averaged approximately $6 2 million deck with arms per day, that's a 32% increase versus Q1 of 'twenty one.
Our market share of deliveries to LNG facilities as rich mentioned remains around 50%.
Exports to Mexico were down in the quarter when compared to Q1 of 'twenty. One as a result third party pipeline capacity added to the market.
Overall deliveries to power plant or up 5% and we believe that natural gas power demand is becoming more inelastic relative to call deliver.
Deliveries to LDC and industrials also increase the overall demand for natural gas is very strong both our internal and wood Mac numbers project between three and four Bcf of demand growth for 2022 and in our numbers, we project growth in all major categories, whereas com industrial power.
Exports to Mexico, and LNG exports.
Our natural gas gathering volumes were up 12% in the quarter compared to the first quarter of 'twenty one.
Sequentially volumes were down 6% with a big increase in Haynesville volumes, which were up 14% more than offset by lower Eagle Ford volumes, which were impacted by a contract termination.
Overall, our budget projected gathering volumes in the natural gas segment to increase by 10% for the full year and we are currently on track to exceed that number.
And our products pipelines segment refined products volumes were up 7% for the quarter compared to the pre tax pre pandemic levels is in Q1 of 19 as a reference point road fuels were down about half a percent so essentially flat while sales down 18%.
We did see a decrease in the monthly growth rate as we went through the quarter. So higher prices may be starting to impact demand.
Crude and condensate volumes were down 4% in the quarter versus the first quarter 'twenty, one sequential volumes were flat with a reduction in the Eagle Ford offset by an increase in the Bakken.
In our terminals business segment.
<unk> expense remains high at 92%.
Excluding tank out of service for required inspection utilization is about 95%.
Iraq business, which serves consumer than domestic demand was up nicely in the first quarter, our pub facilities, which are driven more by refinery runs international trade and blending dynamics dynamics were also up significantly.
Steve said, we've seen some green shoots in our marine tanker business with all 16 vessels currently sailing under firm contracts and day rates are still pretty Bang, that's still lower relative to expiring contracts.
On the bulk side.
Overall volumes increased by 19% driven by pet Coke and coal, which more than offset lower steel on or volume and our C. O. Two segment crude volumes were essentially flat compared to Q1 of 'twenty, one and NGL volumes were up 7%.
Yeah, two volumes were down 9%, but that was due to the exploration of the carried interest I'll following payout on a project in 'twenty one.
On price, we felt very nice okay.
Nice increases in all of our primary care model.
Overall, we've had a very nice start to the year for the first quarter, we exceeded our DCF planned by 4%.
We estimate that roughly half of that outperformance was due to price and the other half due to strength in our base business as Steve said, we currently project that we will exceed our full year 2022 plan, we've not specifically quantified the outperformance because one it is relatively early in the year and two there are a lot of moving pieces.
Commodity prices gathering volumes inflation regulatory demands and interest rates to name a few but we expect the upsides to outweigh the downsides and with that I'll turn it to David Michael Alright. Thank you Tim.
So for the first quarter of 2022, we are declaring declaring a dividend of two.
<unk> $775 per share, which as rich mentioned as $1.11 annualized and 3% up from our 2021 dividend.
For the quarter, we generated revenues of $4 $3 billion, which is down $918 million from the first quarter of last year.
When you exclude the large nonrecurring contribution from winter storm Yuri.
From last year, our revenue would have been higher this quarter versus last year.
And our net income was $6 $667 million down from the first quarter of 2021, but excluding the contribution from winter storm year end last year our contract.
Our net income during the first quarter of 2021 would have been $569 million, so relative to that recurring amount, we generated $98 million or 17% higher net income this quarter versus last year.
Our DCF performance.
With strong natural gas segment was down $797 million, but again the winter storm contribution from last year, which was over $950 million in the first quarter of 2021.
Led you to the majority of that decline this quarter otherwise.
Otherwise, we had nice nice outperformance in our natural gas segment.
Driven by contributions from our Stagecoach acquisition, Tennessee gas pipeline contributions.
Our Texas intrastate.
As well as greater volume on Kinderhook, our product segment was up $36 million driven by increased refined product volumes and favorable price impacts, partially offset by higher integrity costs in our terminals business up $11 million versus Q1 of 2021 with greater contributions.
From a bulk terminals driven by higher pet Coke and coal volumes as well as growth in our liquids terminals business due to expansion project contributions and an unfavorable impact from winter storm you already during 2021.
And those were partially offset in the terminal segment by lower contributions from our New York Harbor terminals in our Jones Act tanker business.
Hum.
Our Cotr segment was down $83 million and more than all of that decline is explained by the segment's contribution from winter storms. During 2021 other than that the Cotr segment is up nicely year over year, mainly driven by commodity prices.
Total DCF generated in the quarter was 145 5 billion or <unk> 64 per share.
That's down from last year, but again, excluding the nonrecurring contributions from winter storm year, DCF would be up $203 million or 16% higher compared to the first quarter of 2021.
Moving onto the balance sheet, we ended the quarter with $31 $4 billion of net debt.
With a net debt to adjusted EBITDA ratio of four four times.
That's up from three nine times at year end 2021.
But excluding the nonrecurring EBITDA contributions from Yuri.
The year end ratio would have been four six times. So we ended the quarter favorable to our year end recurring metrics.
Net debt during the quarter increased $191 million.
And here's a reconciliation of that change we generated $1 $4 5 billion of DCF.
We paid out $600 million of dividends.
We contributed $300 million to our joint ventures, and two growth capital investments.
We had $250 million of increased restricted deposits, which is mostly due to cash posted for margin related to our hedging activity and we had a $500 million working capital use which is not uncommon in the first quarter. When we have higher interest expense payments property tax bonus payments and we all.
Is that a rate case.
<unk> refund paid.
And that explains the majority of the $191 million four for the quarter and with that I'll turn it back to Steve. Okay. Thanks, David Michelle if you'd come back on and open it up for questions.
I'll just point out we've got our entire senior management team around the table here. So we will be passing that Mike as you have questions about our different segments and their performance and outlook et cetera. So Michele open. It up. Please. Thank you Sir at this time, if you have any questions or comments you May press star one please mute your phones and state your first and last name and <unk>.
Any name Unprompted.
Our first caller is Jean Ann Salisbury with Bernstein, you May go ahead.
Hey, I just wanted to ask about the potential compression expansion.
How are customers comparing the compression expansion option versus a new build or the rates. Similar obviously, you mentioned that the timeline to market is faster which is great.
But maybe the compression rate is lower since that fuel cost is higher just wanted to understand which way and a more attractive to customers.
Very good Tom Martin President of our gas group so.
So I mean can't get too specific about overall rates, because it's a competitive situation, but I think.
I'll just say it is attractive to the market in total as Steve said it is more fuel costs, but that will be at.
At least partially offset by a fixed fee.
That's associated with it.
So I think the key is speed to market and that's the message that we're hearing from our customers is.
Getting this in service in 2023.
And really help alleviate a containment issue that we are that.
That we that we're really seeing starting to see now and certainly expect to get much worse as we get into 2023. So.
Not ready to call. This a win yet clearly we've got a lot of work to do but were getting some good feedback.
Great that's helpful and I guess on that topic in just 18 months could add compression and some looping kind of a longer then that's when my project in the past due to supply chain issues going on and I just like to the mandate.
Yeah, I mean, it's it may be somewhat longer but we.
We've made some mitigating steps we've taken some mitigating steps to help make that better than it otherwise could have been but I think in these times, that's that's probably indicative if not longer.
Okay, and then just one more follow up on this if I. If I may are you seeing any movement from kind of the the people that have not traditionally signed up for long term contracts like the privates to sign up the time, given more constraints on flaring and everything or do you think it's going to likely be the same mix of customers as in the past.
Hmm.
Hard to speculate specifically on customers, but I think I would say, it's a broader.
Customers in general and what we might have seen on the Greenfield projects.
I'm speaking I think really to the point, you're making is that there are.
There's a broader set of.
Customer interests to stop.
Great. That's all for me that's Super helpful. Thank you.
Thank you. Our next caller is Colton bean with Tudor Pickering, Holt <unk> company, Sir you May go ahead.
Good afternoon to you all mentioned seeing higher costs in the release can you just elaborate on where youre seeing those constitute a system, whether that's materials labor or other areas.
Yeah. So there are two there are two categories of higher costs here. One is that we've added some work to the plan. Okay. So we've we've added some incremental integrity and maintenance work to the plan and so that's not that's not an inflation thing that's just a scope of work thing and it's.
It's not a it's not a ongoing or recurring but we're doing some we're doing some work there that we'll be doing this year and probably next year, that's one category.
Good thing is we haven't experienced a great deal of inflation to date, we experienced as normal when commodity prices are up you see it in the are in the oilfield right, but commodity prices are up to the revenues are up to go with it and so we're seeing some there the other places where we're seeing inflation, we projected a law.
Inflation, but the places where we've actually experienced at our obviously.
Fuel for our trucks, okay and for our other equipment. So fuel prices are up those prices are up related hydrocarbons or <unk>.
Composites like lubricants is also up and and some materials.
<unk> costs for certain equipment has come up and even though raw steel has come down a little bit. It's been down then up a little so it's some materials equipment lubricants fuels.
Great appreciate that and then rich mentioned the need for incremental U S. LNG are there any optimization opportunities available to you all and Elba island or Alternatively, if market interest has increased could that be a potential divestiture candidate.
Okay.
Yes so.
The current project is fully utilized.
Our customer there certainly is an opportunity to do and.
An expansion there are small scale expansion.
We have those discussions a couple years ago, obviously with what is happening now we're dusting that off again very early days to say, whether there's a real potential there, but overall the market opportunity.
That might be something worth looking at.
The thing I'd add to that is just that.
A lot of the way we are participating in this LNG growth opportunity. Both what has come to pass already and what we believe is still to come is off of our network and so we can participate in that market and the growth opportunity by serving them and serving them well with our pipeline infrastructure and our storage assets along or not.
Work, and particularly with a lot of that growth coming in Texas, and Louisiana, where our footprint is especially robust and so you know Alba is something we will evaluate as Tom said and we'll work with our customer on that but really a big play for us in our in our in the trend here is to be able to bolster what we do from a transportation and storage.
Service provider standpoint.
Got it that's helpful. I appreciate the time.
Thank you our next caller is Jeremy Tonet with J P. Morgan Sir you May go ahead.
Hi, good afternoon.
Good afternoon.
Just wanted to see with the compression expansions. If you are able to provide any thoughts with regarding to a capital outlay there for us to kind of frame that you're talking about being more capital efficient.
And then at a Greenfield and then at the same time as it relates to the new Greenfield does this really change I guess the pace of how you're exploring those.
The pace of that project, given how it's going to take longer to build a pipeline today than it did in the past and so presumably there's going to be need for incremental pipe beyond these expansions pretty quickly at which point the Permian pass could could service that need.
Well, Yeah again, I don't think we want to give them the capital discussion again in a competitive environment on the expansion project, but I think to your second point, Yeah. I think that's exactly right. So the market will go up relatively quickly.
Where we're estimating.
You know a greenfield pipe will now be needed sometime in 2026.
After all the expansions are done to fill their immediate needs are.
And so you know with that given you know the.
Timeline on doing Greenfield type projects I mean.
That would lend itself towards and thereby be sometime early next year for that kind of a product.
Got it that's a helpful. There and then just wanted to kind of pivot towards you discussed this a G. H G collaboration study with other partners and in midstream here and just wondering if you could expand a bit about that I guess the objectives behind that and I guess what were some of the drivers moving forward.
With that project.
Yes, I mean I think.
Holistically International LNG markets.
<unk> are driving the bus on on on getting our S. G lower methane intensity type volumes and so we're certainly working with our good customer in support of that initiative and you know really what this initial effort is as a pilot program to help identify.
Our methane intensity on specific assets at specific locations.
The hope is that that will broaden and ultimately support.
A certification process that will help earmark, a lower methane intense gas going to international markets Jeremy.
Jeremy I'd just add to that you know that we have seen a bit of an inflection. This year, we've been talking about our low methane emissions intensity.
Marketing that as part of our service offerings and we've been doing that for a while and we got a deal last year and we got another couple of deals following that got a tariff filing on T. G. P. There's all of a sudden.
An enormous amount of interest in it and by our by our estimation about 25% of the natural gas produced in the U S. Today could qualify and there if you take all their targets into account you get up to a third and so we think that this is gonna be appointed distinction in the future. We're seeing evidence of that now.
And just to add on real quick there is do you see this as something that increases profit or is it cost of doing business or how do you think about how this goes.
Yeah, Tom long issue yeah.
Too early to say.
I guess my thought is that that'll be ancillary services that come out of.
Responsibly sourced gas cooling efforts as well as some of the certification process.
As we go forward, but you know I think right now it's more about identifying what we can do and what we can't do on a large scale in the near term and in identifying ways to.
Harvest that for the market.
Got it that's helpful. Thank you.
Thank you our next caller is Brian Reynolds with UBS, Sir you May go ahead.
Good afternoon. Good afternoon, everyone maybe to start off on capital allocation, you talked about got EBIT guidance of roughly $7 $2 billion being David to the upside versus the downside is.
Kind of sift through the global macro uncertainty.
I'm curious given the change in the global macro since the analyst day have any assumptions changed around capital allocation and the buyback commentary from January I guess in other words you know.
Capex needs been pulled forward, the gtx and ph D expansions or the potential of that idea of new Permian type impacts hinders process around potential buybacks maturing next thanks.
Yeah, there's been no change in the principles are we.
We are focused on making sure we keep the balance sheet strong and that we find available capital projects that provide good NPV a good MPV at well above our weighted average cost of capital.
And in returning value to shareholder shareholders with the dividend increase that we're talking about today as well as share repurchases. So.
So we do have some additional capacity given our performance.
We have some additional capex in our forecast we went up a little over $100 million from where we were in the in the budget and.
We continue to look for those but we're you know we're we're we're in to the year a good amount now and I think we're still confident confident in saying that we will have the capacity even with the opportunities coming forward, you'll still have additional capacity beyond that.
David anything you want to add no I think you've covered it.
Oh.
Great. That's super helpful. Maybe as a follow up on the on the Ruby bankruptcy proceedings, just kind of curious if you could talk about the tenders position as you know it seems like there's conflicting views on no other handing over the over the pipelines the bondholder inspirations booking to repurpose the pipe for the long term for additional purposes potentially.
At the expense of margin in terms of any color there would be helpful. Thanks.
Yeah. So you know.
The overall message on Ruby is the same as it's been for a long time, which is that we are.
We are gonna make decisions here that are in the best interest of our K and my shareholders.
Well that as we enter into this new process that we're going to be able to work out a reasonable resolutions. We continued to operate the pipeline and and I believe that's what makes sense in the in the longer term and I think you just have to separate out.
Rhetoric in the courtroom from you know reality here and and so we'll continue to work in a constructive way with our Counterparties.
Cause you I appreciate the color or have a good day everyone.
Thank you. Our next caller is chase Mulvehill with Bank of America, You May go ahead.
Hey, Good afternoon, I guess first question I, just wanted to come back to the <unk>.
Natural gas egress discussion around the Permian.
Many investors.
You'd probably see an announcement alongside today's results for relatively expansions of Gtx and Permian Highway.
It does obviously you sound like it's moving alone, but I don't know if you'd be.
Be willing to kind of provide.
Maybe your thoughts around timing of when something could get officially sanctioned here and then you said 18 months are kind of you know I guess to get in service when sanctioned.
Are you ordering any long lead time items that could possibly move things up inside of 18 months.
And then last one is just the.
Opportunities to expand.
Do expansions outside of kind of 42 inch pipes.
Do you see any opportunities there.
I'll start and ask Tom to correct anything I'd get wrong here, but we're.
We're not yet talking about timing I think it's fair to say the market is very interested and they see the wall coming in terms of capacity constraint and so that has turned up the heat and turn up the volume on commercial discussions and because of the timeframe that's required in the timeframe and the speed to market that we're able to offer.
You know, we like our chances very much in this discussion, but we're not going to project a particular time, we it didn't come alongside the announcement today, because we get contracts before we go and so we're working on that and and we're working fast and hard on that.
Going to talk about specific commitments, but I'll, just say that we've been obviously, we've not been ignoring the supply chain challenges in the marketplace and so we've made but we believe are appropriate.
Mitigation steps to mitigate that risk for us.
Okay.
Changes to when do you think this bottleneck.
Really factors in the Permian are you know I think you said last week last earnings call. You said you're in 'twenty three is that kind of still the timeline of when you expect to see a bottleneck.
I think sooner or early <unk>.
Later this year it begins in early 'twenty three.
I mean, you can look at just the financial basis markets and it gives you some insight into 2023, appearing to be more towards the train wreck than it is today.
So yeah absolute need for growth as soon as we can.
Okay last one on Repurposing assets.
Could you talk about opportunities that you see to repurpose some of your underutilized assets.
Do you think this could be more near term opportunities are really just just really long term opportunities you see to repurpose assets.
We don't have there's one project I can think of where we are actively looking at repurposing. It's not a huge part I don't think you should count it as a huge part of our commercial activity.
Right now, but it's something that we continue to evaluate.
Okay, perfect I'll turn it over thank you Robert.
Thank you our next caller is Michael Lapidus with Goldman Sachs. You May go ahead.
Hey, guys. Thank you for taking my question and congrats on a great quarter.
We're a year and two months removed or so from Yuri.
Can you talk about why customers across the board, whether producers utilities power generators whatever.
We're saying to you in terms of storage rates, meaning gas storage rates.
Kinner of new gas storage contracts, and whether there's a physical need for expansion of gas storage capacity.
Good question Tom Martin.
Lot of discussion.
That area and we have seen on.
On contract renewals and a significant expansion on especially multi cycle storage rates.
Especially in Texas, but I would say really across the whole footprint.
And I think there are opportunities to expand our storage facilities, especially in Texas, We're taking a hard look at doing that.
And.
There seems to be a lot of interest in it so.
From both the power customers as well as a local distribution cost to customers, especially in Texas.
You know I might add too.
Our acquisition of Stagecoach was quite timely as well.
Right in the middle of this whole trend them as Steve said earlier in a war performing well over our acquisition model assumption on that asset and especially as we integrate that with our Tennessee assets as well.
Got it that's super helpful. Just curious.
And I know, it's going to vary by site, obviously, but when you get a customer or a series of customers interested in having you expand your existing gas storage facility. How should we think about just the process and the timeline to actually physically be able to do so.
Yeah, I mean, it depends on what kind of an expansion we're talking about if it's if it's adding wood.
Raul capability or compression to add injection flexibility.
That's probably a two year timeline.
So maybe slightly longer if you're if you're talking about leaching additional caverns again it depends if it's a.
A brownfield type opportunity or greenfield.
Opportunity, but I think that.
Generally I would say the timeline I would think about is as we talk about expansion opportunities.
Got it and then one last one in hate to do back to back here, but different topic, just curious how you're thinking about.
Growth in the Haynesville from here after a pretty solid start to the year kind of what you think the trajectory is.
Whether you think haynesville takeaway towards the Gulf Coast starts to get tight whether you guys play a role in that.
Yeah. So we've certainly seen a tremendous growth.
Year over year or quarter over quarter, and our gathering assets from about 300000, a day quarter over quarter and we're forecasting.
Upwards of half a bcf a day year over year or full year forecast 22 versus 21.
Yeah, and you're absolutely right I mean, I think as that growth accelerates not only on our asset but other assets in the basin.
Gross al is going to become more critical I think there are.
Some expansion projects that are probably more economical than an incremental greenfield, but I think you know we expect those to fill and there will be a need for incremental green.
Greenfield expansions out of the area as well, especially pointed towards the Gulf coast for LNG exports. So.
We certainly are looking at that don't have anything that we're anywhere close to are talking more about today, but it's certainly true that as a potential opportunity.
Got it thank you guys much appreciated.
Thank you Keith Stanley with Wolfe Research you May go ahead.
Alright. Thank you I had two quick follow ups first Steve you talked to the elder expansion potential maybe a long shot but can you give an update on Gulf LNG is an export facility I think it's fully permitted is that a project that's made any progress in any any efforts there.
Yeah.
As we've talked about in the past we have a re gas customer at that location, who is paying for that capacity.
In today's market, that's not in not in how to use that and use generally at all but but we have a customer and they're a paying customer and they reserve the capacity and we made a deal now.
Now are we.
We will work with that customer to see if theres something that would allow us to bring the potential for a brownfield liquefaction opportunity forward, but we don't have anything to announce there today.
Thanks.
Second one sorry, another Permian expansion question, but.
A little different I guess than your usual business model, but since it's less capital intensive how do you think about <unk>.
Non tracked durations for our Permian.
Gas pipeline expansion are you willing to go less than the 10 years, you've historically targeted or maybe not even fully contracted.
Yeah, No I mean, I think we're thinking a minimum of 10 years and now we will plan to sell all of its capacity I think the market wants it like honestly.
We may very well be oversubscribed, so I think it's a good opportunity to fully solar project, though but process.
Thank you.
Thank you.
Becca Followill with US capital Advisors you May go ahead.
Hey, guys I'm, sorry, another Permian one odd.
And your comments seem to doubt that you're preparing for some of these items that you might need or do you feel like that there is sufficient compression that either you have on hand.
Or have ordered that you could do both of these expansions within 18 months, assuming that your appetite to eat them.
Yeah.
Again, we're reluctant there's we're very in a very competitive situations, but I think I think what is fair to say is what I said, which is we prepared well.
Thank you.
That's the second one is on a new Permian height, just in light of the nationwide permit 12 process. That's underway do you feel like you could build a new pipe under that under an entity P 12, or do you feel like you would need to get individual water body crossings.
Yeah. So it's a first of all really important on the and I know you're not asking about the compression expansions on this question, but one of the great things about these are that they are very permit light right. It's it's getting our air permit under our permit by rule arrangement at the T. C. Q, we think we can avoid issues that would otherwise.
Trigger a more active.
Active federal review by the corps or anyone else. There's some good mitigation built into our plans are to avoid endangered species to avoid open water crossings et cetera. So we've got all that worked out your bigger question, though a nationwide 12 has been open to attack and it's been attacked there's a process underway right now at the federal level, where.
A lot of open ended questions are being asked about should we change. This should we change that should we change the other thing. So there is some uncertainty around nationwide 12, right now no doubt about it hopefully that uncertainty resolves itself as we get closer to needing to use it for something like a big new Greenfield pipeline expansion, but we are to be safe evaluating.
In other contexts with smaller projects, where we may.
B using nationwide 12.
Evaluating how we can get individual permits if need be now for the most part what the core we'll point you toward is nationwide 12, that's what it's therefore use that but if we were it's only prudent for us to evaluate if if you end up in a problem there to have a plan b and so where we're developing those planned fees.
Perfect. Thank you.
Thank you and at this time I'm showing no further questions in the queue.
Great. Thank you very much have a good afternoon.
Thank you. This concludes today's conference call you May go ahead and disconnect at this time.
Yeah.