A joint venture (JV) between ONEOK (OKE -0.50%), Enbridge (ENB -0.82%), MPLX (MPLX -0.58%), and privately held WhiteWater is moving ahead with a new natural gas pipeline. The 450-mile Eiger Express Pipeline will transport up to 2.5 million cubic feet per day of natural gas from the Permian Basin in West Texas to the Katy area near Houston. The partners anticipate completing this large-scale gas pipeline by mid-2028.
The project adds another visible growth driver for these high-yielding pipeline stocks. Here's a quick look at this new natural gas pipeline project and how it will benefit these energy stocks.
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Introducing the Eiger Express Pipeline
The Eiger Express Pipeline will enable producers in the Permian Basin to ship more gas out of the region to higher-value markets along the Gulf Coast. The pipeline will receive gas sourced from processing facilities throughout the Permian Basin, including those owned by ONEOK and MPLX. It will ship the gas toward the coast to support growing demand from gas-fired power plants and liquefied natural gas (LNG) export terminals.
Firm transportation contracts with terms of 10 years or more will support the pipeline. As a result, Eiger will provide stable income to its owners when it enters commercial service in the middle of 2028. WhiteWater will construct and operate the pipeline, which will be 70% owned by the Matterhorn JV, a partnership that owns other long-haul pipelines transporting gas from the Permian to the Gulf Coast. WhiteWater (65%), ONEOK (15%), MPLX (10%), and Enbridge (10%) co-own Matterhorn. ONEOK and MPLX will each own separate 15% interests in the Eiger Express Pipeline JV.
Enhancing its 2028 growth wave
ONEOK will be the biggest beneficiary among the publicly traded pipeline companies with a 25.5% interest in Eiger. It adds to what's becoming a major growth wave for ONOEK in 2028. The pipeline company formed a JV with MPLX earlier this year to build the Texas City Logistics LPG export terminal (50-50 ownership) and associated MBTC pipeline (80% owned by ONEOK and 20% by MPLX). ONEOK will invest about $1 billion into that JV, with both projects expected to be online in early 2028.
The pipeline company has a few other growth projects on track for completion in the interim. It expects to complete the expansion of its refined projects system in Denver by the middle of next year, rebuild its Medford Fractionator (fourth quarter of 2026 and first quarter of 2027), and construct the Bighorn processing plant (middle of 2027). Additionally, ONEOK expects to continue benefiting from merger synergies after closing several acquisitions in recent years. These growth catalysts should provide ONEOK with the fuel to increase its 5.5%-yielding dividend by 3% to 4% per year over the next several years.
Adding more fuel to its high-octane income stream
MPLX will hold a 15% direct interest in Eiger, in addition to its stake in Matterhorn. The investment further enhances its long-term growth outlook. The master limited partnership (MLP) has several expansion projects in its backlog, including its JVs with ONEOK, its interests in the Blackcomb (target in-service date: second half of 2026), Rio Bravo (second half of 2026), and Traverse (2027) pipelines, and two new Gulf Coast NGL Fractionators (2028 and 2029). This pipeline of projects gives MLPX clear growth visibility through the end of the decade. The MLP also recently enhanced its near-term growth profile by agreeing to acquire Northwind Midstream in a $2.4 billion deal.
Those investments support MPLX's strategy of growing its earnings at a mid-single-digit annual rate. That should support distribution growth at or above this level (MPLX has increased its payout at a more than 10% compound annual rate since 2021). With its distribution already yielding more than 7.5%, MPLX is a very attractive income stock (as long as investors are comfortable receiving the Schedule K-1 federal tax form the MLP sends them each year).
Lots of fuel to continue growing its high-yielding payout
Enbridge will get the smallest bump from Eiger, given that it only holds a 10% interest in the Matterhorn JV. However, the Canadian pipeline and utility company has a massive expansion project backlog at over 32 billion Canadian dollars ($23 billion). Its growth projects run the gamut, from oil pipeline expansions and new gas pipelines to natural gas utility growth projects and solar power plants. Enbridge expects its current slate of capital projects to enter commercial service through 2029.
The company expects these projects to fuel 3% compound annual cash flow per-share growth through 2026, accelerating to around 5% annually thereafter. That should support dividend growth of up to 5% per year. Enbridge has increased its dividend, which currently yields 5.7%, for 30 straight years.
Excellent income growth stocks
ONOEK, MPLX, and Enbridge already had lots of visible growth coming down the pipeline. They're now adding another growth driver in Eiger. This project will further enhance their ability to grow their high-yielding dividends in the coming years, making them excellent stocks to buy and hold for a steadily rising stream of passive income.
