Kinder Morgan Inc. (NYSE: KMI), EagleClaw Midstream Ventures LLC and Apache Corp. (NYSE: APA) plan to develop a proposed Permian Highway Project (PHP) to provide an outlet for increased natural gas production from the Permian Basin, unlocking the basin's "full growth potential," the companies said in a joint statement June 25.

Kinder Morgan and EagleClaw, a portfolio company of Blackstone Energy Partners, will be the initial partners with 50% ownership each in the roughly $2 billion project. Apache, which has been jointly developing the proposed project, will have an option to acquire up to 33% equity in the project from the initial partners.

“As investors throughout the energy value chain, with extensive holdings of both midstream and upstream assets in the Permian Basin, we have a firsthand understanding of the need for additional takeaway capacity to unlock the full growth potential of the Permian Basin,” David Foley, CEO of Blackstone Energy Partners, said in a statement. “We look forward to continuing to proactively address the critical infrastructure needed to support producers, and we are excited to establish a partnership on this important project between EagleClaw, the largest privately-held natural gas gathering and processing business in the Delaware Basin, and Kinder Morgan, one of the nation’s most experienced pipeline developers and operators.”

Kinder Morgan plans to build and operate the pipeline, which will be designed to transport up to 2 billion cubic feet per day (Bcf/d) of natural gas through about 430 miles of 42-inch pipeline from the Waha, Texas, area to the U.S. Gulf Coast and Mexico markets.

Given the level of producer inquiry, Kinder Morgan is also evaluating the economic and hydraulic feasibility of a 48-inch pipeline with increased transportation capacity, according to the press release.

Natural gas supply will be sourced into the PHP project from multiple locations, including Kinder Morgan’s, EagleClaw’s and Apache’s existing systems in the Permian Basin, with additional interconnections to both intrastate and interstate pipeline systems in the Waha area. Apache and EagleClaw will be significant shippers on the proposed pipeline. Apache plans to commit up to 500,000 dekatherms per day, the release said.

“The PHP project is structured to provide unrivaled market optionality for Permian producers,” Sital Mody, chief commercial officer of Kinder Morgan Natural Gas Midstream, said in a statement.

The PHP project will hold capacity on Kinder Morgan’s intrastate pipeline systems in the market area, which will uniquely enable it to deliver natural gas to the Katy market hub, the Agua Dulce market hub, the Coastal Bend and Kinder Morgan Tejas headers connected to the Freeport LNG export facility, the Cheniere header connected to the Cheniere Corpus Christi LNG export facility, and numerous pipelines along the Texas Gulf Coast.

The PHP project is expected to be in service in late 2020, subject to the execution of definitive agreements and the receipt of construction permits.