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Half of Kinder Morgan’s Stake in Georgia LNG Facility is Sold to Unknown Company10/26/2022
Kinder Morgan Inc. decided to sell half of its 51% interest in an LNG facility in Georgia on September 27 with proceeds allocated by the Houston-based company to pay short-term debt and buy back shares.
As it is acknowledged, an undisclosed financial buyer purchases the 25.5% equity interest in Elba Liquefaction Co. LLC (ELC) for approximately $565 million. ELC is a joint venture (JV) established in 2017 to build and own the Elba liquefaction facility situated on Elba Island in Chatham County, Georgia.
Kinder Morgan’s interstate natural gas president, Kimberly Watson, welcomed the new partner in the ELC JV and admitted that the company believes that this investment further shows the value of LNG and exhibits the significant role it will play for years to come.
After completion, Kinder Morgan and the undisclosed financial buyer will each hold a 25.5% stake in ELC. Meanwhile, Blackstone Credit will continue to hold a 49% interest.
The value of the equity interest considers an enterprise value of almost $2.3 billion for ELC, which is about 13 times 2022E EBITDA. The transaction has an economic effective date of July 1.
Moreover, Kinder Morgan will continue to manage the Elba Liquefaction facility. The company arranges to use proceeds from the transaction to dwindle short-term debt and guarantee additional capacity for attractive investments, including opportunistic share repurchases.
The Elba liquefaction facility has 10 modular liquefaction units for a total capacity of roughly 2.5 million tonnes per year of LNG. Kinder Morgan considers it equivalent to almost 350 MMcf/d of natural gas.
The final modular liquefaction unit of the Elba facility commenced working in August 2020, marking the closing of the $2 billion project. Previously, Elba Island Liquefaction facility was only an LNG import terminal.
Elba is linked to Southern LNG Co. LLC, owned 100% by Kinder Morgan. Southern LNG also owns and manages the Elba Island LNG Terminal, including the LNG storage tanks and the ship dock for import and export.
The facility is financed by a 20-year contract with Shell LNG NA LLC, which is signed to 100% of the liquefaction capacity.
With approximately 70,000 miles of natural gas pipelines, Kinder Morgan owns an interest in or operates the largest natural gas network in North America. Its pipelines serve major consuming domestic markets and transport about 40 percent of the natural gas consumed in the United States. They are also connected to every important natural gas resource play and supply area in the United States, including the Eagle Ford, Marcellus, Bakken, Utica, Uinta Permian, Haynesville, Fayetteville and Barnett.
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Certified Low Emissions Gas - Williams & PennEnergy Partner Together
Williams said on Aug. 8, that it concluded an agreement to support the selling and transportation of certified, low emissions next-gen natural gas from PennEnergyResources LLC. According to the deal, Williams will construct a marketing portfolio to market the natural gas to utilities, LNG export facilities, and other facilities which can efficiently use clean energy. Moreover, the agreement involves a certification process that verifies best practices are being followed to reduce emissions and produce natural gas in an environmentally responsible manner collaborating with an independent third party. The partnership with PennEnergy is a continuation of Williams' strategy to collect, market, and deliver low-carbon natural gas to the end user from the wellhead. PennEnergy’s 378 production wells in southwest Pennsylvania supply the US with natural gas and they have achieved Platinum status from Project Canary’s TrustWell certification.
Rail Permit for New Fortress to Ship LNG Expired, Putting Future Projects at Risk
Uncertainty grows: as New Fortresses permit to ship LNG by rail expires, PHSMA explores temporal pausing of the method to provide more time to study safety-related issues. The news prompts one to wonder whether Fortress will proceed with its Pennsylvanian LNG project, in which it has already sunk about $159 million in development.
Enbridge acquired Tres Palacios natural gas storage facility in Texas for $335 million, adding approximately 35 Bcf of natural gas storage to their portfolio. The facility uses salt caverns for storage and has a gas header pipeline system that spans 62 miles and links to 11 major gas pipelines. Crestwood Equity Partners LP intends to divest its interests in Tres Palacios by the second quarter.
The U.S. natural gas pipeline network is a complex system of pipelines that transport natural gas from production areas to consumers across the country. The pipeline network consists of three main types of pipelines: gathering pipelines, transmission pipelines, and distribution pipelines. Gathering pipelines are small-diameter pipelines that transport natural gas from production wells to processing facilities or larger transmission pipelines. Transmission pipelines are large-diameter pipelines that transport natural gas over long distances, sometimes across multiple states. Distribution pipelines operate at low pressure and are located in or near urban areas. They are often referred to as "utility pipelines" because they are typically owned and operated by local gas utility companies.
Diamondback Energy, an independent oil and gas company, has successfully completed the acquisition of Lario Permian, marking the closure of two major deals in the fourth quarter of 2022. The company purchased two private operators in the Midland Basin for approximately $3.3 billion.