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Momentum Midstream Becomes a Leader in Haynesville Due to Latest Acquisitions10/13/2022
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.
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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Energy Transfer LP Races to Carry Permian Basin Gas to Gulf Coast Hubs
The ever-increasing demand for natural gas exports from the Gulf Coast started a race to further develop Permian Basin. Various companies, including Kinder Morgan and MPLX, are among those looking at building new pipelines in the region due to the demand spike. But Energy Transfer seems to edge past them into the lead since its project strikes as the most economical option for the basin outside of capacity expansions on existing pipelines and could essentially add 1.5-2 Bcf/d of transport capacity with just 260 miles of new pipe.
Potential Deal for $5 Billion: Tug Hill and Quantum Energy Seek Sale
Undisclosed industry sources said that THQ Appalachia I LLC (Tug Hill and Quantum Energy) is seeking a sale of the U.S. natural gas producer for more than $5 billion, including debt. Mainly operating in the Marshall and Wetzel counties in West Virginia, THQ Appalachia has net production of around 760 MMcf/d. Despite volatility in commodity markets which has made the valuation of energy producers tougher, THQ Appalachia is anticipating more than $5 billion due to the worth of its existing production and the possible value of its undeveloped acreage, the sources said on June 17. Additionally to purchasing THQ Appalachia, possible bidders in the sale process also have the opportunity to buy XcL Midstream, the pipeline firm that moves the company’s gas to market and has the same CEO as in Tug Hill. If the same buyer chooses to purchase XcL, the deal consideration will increase further. However, the anonymous sources admitted that the sale depends on the market conditions and is not guaranteed since Tug Hill and Quantum could ultimately decide to retain some or all of THQ Appalachia and XcL’s assets. Tug Hill and Quantum refused to comment on these statements and XcL did not respond to a comment request.
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.