Energy giant Kinder Morgan posted second-quarter profits earlier this year that surpassed the operating budget of the city of Kyle over the course of the past decade.

That’s the backdrop against which the city fought the Permian Highway Pipeline (PHP), a 42-inch, 430-mile natural gas pipeline routed across the Edwards Aquifer and through the Kyle.

After a rare Friday night meeting last week, the Kyle City Council and Kinder Morgan came to an agreement to settle the city’s lawsuit. Term...