Ruby Pipeline, which carries 1.5 Bcf/d of Rocky Mountain natural gas to western U.S. markets, is gaining Calgary-based Veresen Inc. as a half-partner after Global Infrastructure Partners (GIP) agreed Monday to sell its share for $1.425 billion. El Paso Pipeline Partners LP (EBP) would continue to control 50%.
GIP has held its interest in the 680-mile, 42-inch diameter system since 2009 (see Daily GPI, July 28, 2009). Kinder Morgan Inc., which bought Ruby's original owner El Paso Corp. in 2011, dropped the pipeline into EBP earlier this year (see Daily GPI, April 28).
Ruby has expansion potential to 2 Bcf/d through the addition of compression, Veresen said. Ruby originates at the Opal Hub in Wyoming and extends to the Malin Hub in Oregon. The Malin Hub is the main interconnect to the proposed Pacific Connector Gas Pipeline, half-owned by Veresen, which would supply Veresen's proposed liquefied natural gas (LNG) export terminal in Oregon.
Jordan Cove Energy Project LP in March was granted conditional authorization to export LNG to countries without free trade agreements with the United States from the Jordan Cove LNG Terminal in Coos Bay, OR (see Daily GPI, March 24).
"This is a rare opportunity to acquire a large interest in a core U.S. pipeline asset," said Veresen CEO Don Althoff. "Ruby is an ideal fit for Veresen because it offers immediate long-term contracted cash flows with downside protection through the preferred interest structure, and provides significant future added upside related to our Jordan Cove LNG project.
"This transaction is consistent with Veresen's growth strategy, where we are focused on leveraging our existing footprint, adding assets with further growth potential, and providing natural gas connectivity from competitive supply regions to high-value markets."
Concurrent with the transaction, Veresen has entered into an $800 million bought deal financing to fund the acquisition. The transaction is set to close by the end of the year, subject to approval by the Committee on Foreign Investment in the United States.
Veresen noted that Ruby has long-term ship-or-pay contracts for about 1.1 Bcf/d, representing 71% of total current capacity. The weighted average remaining contract term is about nine years.
"Over the past five years, together with our strategic partners -- first El Paso Corp. and then Kinder Morgan, Inc. -- we have had the privilege of being involved in the development and operation of the Ruby Pipeline, a critical U.S. infrastructure asset that delivers natural gas from the Rockies to markets in California, Nevada and the Pacific Northwest," said GIP Chairman Adebayo Ogunlesi. "We are proud to have helped develop and place into service this first carbon-neutral U.S. pipeline."