Talking Point #1: Over the past 18 months we’ve seen basis differentials rise quite sharply. Those regional pricing differences for crude oil and natural gas are up at least in part to insufficient pipeline infrastructure, including what serves key shale fields like the Permian Basin. Has this resulted in a surge of capital spending (CAPEX) to build new pipelines and gathering networks? Is there a risk of overbuilding?
RC: There are certainly a number of pipeline projects underway in west Texas. That’s one big reason I’m very confident that Kinder Morgan (NYSE: KMI) will keep moving the profit meter in the right direction: They have two of big pipes in development to move natural gas from the Permian Basin to the Gulf Coast.
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Elliott and Roger on Jun. 29, 2022