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Dominion Terminates Questar Pipeline Sale To Berkshire Hathaway

On July 12, 2021, Dominion Energy and Berkshire Hathaway Energy issued separate statements that the firm had put the intended sale of the Questar Pipeline Group on hold due to regulatory clearance issues.

The Questar Pipeline delivers natural gas and deposits it beneath the ground near substantial reserves in six major producing regions in the Rocky Mountains, including the Uinta, Greater Green River, and Piceance basins.

Berkshire Hathaway Energy, a subsidiary of Berkshire Hathaway Inc.—the multinational guided by famed billionaire Warren Buffett—agreed to buy Questar Pipeline last year as part of its almost $10 billion Dominion's gas sector purchase.

According to Berkshire Hathaway and Dominion Energy, the postponed Questar Pipeline deal has no impact on the acquisition of storage assets and gas transmission to Berkshire Hathaway Energy, expected to complete in November 2020.

"The option is a result of continued uncertainty associated with gaining clearance from the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976," Dominion noted in a report.

Furthermore, the canceled deal has no impact on Berkshire Hathaway Energy's sale of gas distribution and storage assets in November 2020. The sale was about the initial transaction amount, according to the press releases of the corporation.

The transaction included the acquisition of 100% of Dominion Energy Transmission and Carolina Gas Transmission, 50% of Iroquois Gas Transmission System, and a stake in Maryland's Cove Point LNG facility, in addition to Questar Pipeline. The asset value of the financing transaction, which comprises the assumption of debt, is $9.7 billion.

On July 12, Dominion said that it continues to regard Questar Pipeline as a terminated company. Also, it would initiate a fair market sale by the end of 2021.

Dominion also said that it intends to take out a one-year term loan to pay Berkshire Hathaway Energy the $1.3 billion purchase price. The company plans to pay off the debt using revenues from a future sale of Questar Pipelines to a new client.

The Rationale Behind The Agreement

Dominion Energy's gas storage and transportation infrastructure, and $5.7 billion in debt, were purchased by Berkshire Hathaway. To complete the transaction, it will invest approximately $4 billion in cash. Employees at the impacted sites will soon be moved to Berkshire Hathaway Energy, at the same time, without job losses yet disclosed.

According to a statement, they utilized the profits from the deal to purchase back Dominion Energy shares. The decision is part of the company's strategic repositioning towards government and utility operations for sustainable development.

Later that day, the company announced that it no longer works with Duke Energy on the Atlantic Coast pipeline. Dominion Energy also said in a statement that the decision was made due to "ongoing delays and increasing cost uncertainty."

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Questar Pipeline Energy Gas

A $2 billion deal saw Dominion Energy sell Questar Pipelines to Southwest Gas

A good asset will not sit on the market for long. After a deal with Berkshire Hathaway fell through, Dominion Energy managed to secure another one for Questar Pipelines in a drop of a hat. And get that, it is better than the former one by more than half a billion! Although not everyone is happy with such decisions, it seems that even Carl Icahn’s complaints won't be able to sway Southwest Gas Holdings’ decision. Though we will have our eyes peeled in any case… If everything goes as planned, a $2 billion deal will be closed before the end of the year.

Oil output in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. Additionally, gas productivity in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Given that this growth has been expected, recent global market changes make forecasting the output even more challenging. Learning how production will change is easier with early activity tracking, a new service recently launched by Rextag – Pad Activity Monitor. With the help of PAM, you are able to monitor well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days. Additionally, it cuts down activity reporting lag times by at least 98%, from 120-180 days down to just 5-8 days. In order to access reports, charts, tables, and mapping visualizations via Rextag’s Energy DataLink use a web-based application allowing users to filter, download and identify activity on a map or data table. Moreover, customers will be able to set up daily, weekly, and monthly email report notifications.

The EIA forecasts that total output in the main U.S. shale oil basins will increase 142,000 bbl/d to 8.761 million bbl/d in June, the most since March 2020. Oil productivity in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. In the largest shale gas basin, the productivity in Appalachia in Pennsylvania, Ohio and West Virginia will grow up to 35.7 Bcf/d in June, its highest since beating a record 36 Bcf/d in December 2021. Gas output in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Speaking of the Permian future output, putting hands on upcoming changes in production has recently been made easier with the new Rextag's service - Pad Activity Monitor. Thanks to satellite imagery and artificial intelligence, customers are able to monitor the oil and gas wells and are provided with near real-time activity reports related to drilling operations. However, it is noticed that productivity in the largest oil and gas basins has decreased every month since setting records of new oil well production per rig of 1,544 bbl/d in December 2020 in the Permian Basin, and new gas well production per rig of 33.3 MMcf/d in March 2021 in Appalachia.

No sooner had the crude prices soared above $100/bbl than the industry professionals believed in an incredible growth of drilling activity in North America’s largest shale patch. Analysts speculate that additional output of 500,000 barrels of oil daily would become a significant part (4%) of overall U.S. daily production. That is going to flatter oil and gasoline prices. Drilling permits in the Permian Basin are persistently growing, averaging approximately 210 at the beginning of April. Moreover, the permits trend is noticed as an all-time high as a total of 904 horizontal drilling permits were awarded last month. Nowadays, learning and analysing the current situation and predicting the future development become easier with early activity tracking, a new service recently launched by Rextag. Rextag's Pad Activity monitor (PAM) allows you to see well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days with the help of satellite imagery and artificial intelligence. While the increase in drilling will result in higher production, U.S. shale producers will have to overcome several hurdles including labor shortages and supply constraints.

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