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AltaGas to Purchase Tidewater Midstream Assets in $480 Million Deal
09/14/2023![AltaGas-to-Purchase-Tidewater-Midstream-Assets-in-480-Million-Deal](https://images2.rextag.com/public/blog/182Blog_Tidewater’s Pipestone Natural Gas Processing Plant Phase 1 and II Expansion.png)
AltaGas announced plans to acquire Tidewater's Phase 1 and II expansions of the Pipestone Natural Gas Processing Plant, a truck terminal, and related pipelines.
Recently AltaGas Ltd. revealed that it had finalized a deal with Tidewater Midstream and Infrastructure Ltd. to purchase an array of midstream assets, storage solutions, and terminals for a sum of CA$650 million (approximately US$480 million).
AltaGas will be taking ownership of Tidewater's Phase 1 and II expansion efforts for the Pipestone Natural Gas Processing Plant, as well as the nearby Dimsdale Natural Gas Storage Facility. In addition, the deal includes the acquisition of Pipestone's truck-in/truck-out condensate terminal and its affiliated pipeline networks.
The company stated that this acquisition is poised to enhance AltaGas's midstream operations by enlarging its presence in Alberta's Montney Shale. Furthermore, the deal is designed to secure a sustainable long-term supply of LPG to support AltaGas's global export initiatives.
Overview of the Pipestone Assets
- Pipestone Phase I: An advanced sour deep-cut gas processing facility situated in Alberta's Montney basin, featuring a processing throughput of 110 MMcf/d and a liquids handling capability of 20,000 bbl/d.
- Pipestone Condensate Terminal: A specialized truck-in/truck-out terminal engineered to maximize the value chain of Pipestone-derived liquid commodities.
- Pipestone Phase II: A fully-permitted, shovel-ready extension projected to contribute an additional 100 MMcf/d of sour deep-cut gas processing capacity and augment liquids handling by 20,000 bbl/d.
- Dimsdale Gas Storage: A high-caliber operational natural gas storage asset, proximally located to Pipestone I and II installations, with an extant working gas capacity of 15 Bcf, scalable up to 69 Bcf.
The total transaction value stands at $650 million, which includes $325 million in cash and the distribution of roughly 12.5 million AltaGas common shares to Tidewater. This acquisition hinges on both companies making a favorable Final Investment Decision (FID) for the Pipestone Phase II development. In a move to expedite the FID, AltaGas and Tidewater have forged a new joint venture aimed at completing the requisite steps for the project's construction and development. This partnership framework allows for continued cooperation on Pipestone Phase II, even if the primary acquisition fails to materialize.
AltaGas stated that the deal would represent an estimated 7.2x run-rate normalized EBITDA, factoring in synergies and additional capital investments for the Pipestone Phase II completion. Financially, the acquisition is projected to enhance earnings per share (EPS) by five percent from 2025 onwards, while contributing to a 0.1x decrease in the net debt-to-normalized EBITDA ratio, also starting in 2025.
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OneRock Energy Acquires 160,000 Acres in the Powder River Basin
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/178Blog_OneRock Purchased Northwoods Management Co.’s Powder River Assets.png)
OneRock acquired Northwoods Management’s assets in Wyoming's Powder River Basin, average production of approximately 5,000 barrels of oil equivalent per day.
Kinder Morgan Invests $1.8 Billion in South Texas Gas Infrastructure
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/202Blog_Kinder Morgan Gas Pipelines in South Texas (1).png)
Kinder Morgan's strategic acquisition of STX Midstream from NextEra is a significant move to enhance its infrastructure capabilities in South Texas. The area is witnessing an upsurge in natural gas production and demand, particularly towards Mexico and the Gulf Coast markets. The 462-mile pipeline system, which is highly contracted with an average contract length of over eight years, is expected to generate about $181 million in EBITDA for 2023.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/297_Blog_Keystone XL Pipeline Controversy and Wildlife Disaster From Trump's Green Light to Biden's Red Light on the 15 Billion Project.jpg)
The pipeline industry in the USA faced and still faces a range of regulatory challenges, including permitting delays, environmental requirements, and public opposition to pipeline projects. In recent years, pipeline projects like the Keystone XL and Dakota Access pipelines had legal and regulatory obstacles that delayed or canceled their construction. Keystone XL Pipeline, proposed by TransCanada in 2008, aimed to transport crude oil from Canada (around Calgary and Edmonton) to refineries on the Gulf Coast (Port Arthur). The project faced opposition from environmental groups and indigenous communities, who argued that it would contribute to climate change and pose a risk to water resources. In 2015, President Obama rejected the project, citing concerns about its environmental impact. However, in 2017, President Trump revived the project, leading to further legal challenges. In June 2021, U.S. President Joe Biden officially canceled the project on his first day in office.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/282_Blog_Renewable Natural Gas How RNG Changes the Industry.jpg)
The renewable natural gas (RNG) industry in the United States is showing promising signs of growth. As of 2019, the U.S. consumed 261 billion cubic feet (BCF) of RNG, primarily utilized by independent power producers, electric utilities, and various commercial and industrial entities. However, this figure represents only a small fraction of its potential. Research indicates that the U.S. could theoretically produce up to 2,200 BCF of RNG through anaerobic digestion alone, which would equate to about 11% of daily national natural gas consumption.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/295_Blog_Renewable Efforts Lag as Global Oil and Gas Demand Continues to Rise.jpg)
Recently, the progress toward an energy transition is hitting a snag. Sales of electric vehicles are decelerating, and the growth in wind and solar power needs to be keeping pace with expectations. To make matters more challenging, electricity prices are climbing when they were expected to fall. Amidst these setbacks, the oil and gas sectors are proving resilient. According to BP's latest energy outlook, not only are these energy mainstays here to stay, but their demand is expected to remain relatively high even after reaching a peak. Interestingly, BP forecasts that oil demand will reach its zenith next year, marking a critical moment in energy consumption trends. This isn't the first time BP has projected a peak in oil demand. Back in 2019, their review anticipated a decline in demand growth, but the prediction fell flat. Instead, oil demand surged to unprecedented levels following the end of the global pandemic lockdowns, defying previous forecasts and underscoring the enduring dominance of traditional energy sources in the global market.