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Momentum Midstream Becomes a Leader in Haynesville Due to Latest Acquisitions
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Houston-based company Momentum Midstream LLC on September 22 purchased Midcoast Energy LLC’s East Texas business from an affiliate of ArcLight Capital Partners LLC and Align Midstream LLC from Tailwater Capital and claimed that it establishes a leading presence in the Haynesville Shale.
Terms of the transactions were not disclosed. However, Momentum’s long-time financial partner, EnCap Flatrock Midstream, came alongside some proven institutional energy investors in Yorktown Energy Partners, Martin Sustainable Resources, Ridgemont Equity Partners, Bengas Midstream Partners, and Blackstone Credit to support Momentum’s Haynesville Shale expansion plans, which also add a new carbon capture project, according to EnCap Flatrock Managing Partner and Founder Billy Lemmons.
The deal of Midcoast’s East Texas business, known as Midcoast ETX, and Align Midstream was presented by Momentum alongside a new natural gas gathering and carbon capture project in the Haynesville Shale.
New Generation Gas Gathering or NG3 project will collect natural gas produced in the Haynesville Shale for re-delivery to premium Gulf Coast markets, including LNG export. Moreover, the NG3 project includes a carbon capture and sequestration component that will eliminate 100% of the CO₂ and accumulate it underground for a long time, creating a net negative carbon footprint.
With the combined assets of Midcoast ETX and Align Midstream, Momentum is currently delivering volumes of more than 2 Bcf/d for a diverse customer base composed of producers, utilities, end-users, and LNG exporters.
Momentum’s footprint in the Haynesville includes about 3,000 miles of gathering pipelines, 1.5 Bcf/d of treating capacity, 700 MMcf/d of processing capacity, 200,000 HP of compression, and 820 miles of pipelines transporting gas to the Gulf Coast markets in southeast Texas and the Carthage and Bethel markets in East Texas.
NG3 FID
Momentum also announced on Sept. 22., that the board of directors took a final investment decision (FID) on NG3, its new natural gas gathering and carbon capture project.
The NG3 project is financed by an anchor commitment from Chesapeake Energy Corp. and will have an initial capacity of 1.7 Bcf/d and is expandable to 2.2 Bcf/d.
Momentum CEO said that constant with the past business practices, Chesapeake Energy’s anchor commitment for NG3 comes with an option to get 35% of the project, creating alignment between Momentum and one of the biggest Haynesville Shale producers.
The NG3 project will also capture and permanently sequester up to 2 million tons per annum of CO₂ and is anticipated to start operations in the second half of 2024.
Barclays served as the exclusive financial adviser to Momentum on the Midcoast ETX acquisition. Barclays also arranged the deal financing along with Jefferies Finance LLC, Blackstone Credit, and Wells Fargo Securities LLC.
Jefferies LLC took a part as the exclusive financial adviser to Momentum on the Align acquisition. Vinson & Elkins LLP served as legal counsel to Momentum on both the Midcoast ETX and Align Midstream acquisitions.
Jefferies LLC and Latham & Watkins LLP advised ArcLight Capital Partners LLC on the sale of Midcoast. Piper Sandler & Co. and Locke Lord advised Tailwater Capital on the sale of Align Midstream.
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Dallas-Based Sunoco Buys NuStar Energy for $7.3 Billion
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Sunoco, a gas station company based in Dallas, will buy NuStar Energy, a major operator of liquid storage and pipelines, for $7.3 billion. The acquisition of NuStar Energy by Sunoco not only enlarges Sunoco's fuel distribution business but also moves it into the crude oil middle market, especially in the important Permian Basin area.
Haynesville Shale's 2022-2023 Performance Overview, What Happened, Trends
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The Haynesville Shale play, located in northwestern Louisiana and eastern Texas, was recognized in March 2008. Petrohawk Energy Corp. and Chesapeake Energy Corp. had leased acreages in Louisiana, bringing fame to the region. The Haynesville Shale is crucial for meeting the rising demand for LNG exports from the Gulf Coast because of its location. It's expected that Haynesville will contribute about 13 Bcf/d to the overall growth in U.S. gas demand by 2030. However, drilling in Haynesville is more expensive and challenging due to the depth of its wells, especially when compared to areas like the Marcellus Shale.
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