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NextEra Expanding Natural Gas System Across Texas, Mexico with $2.1B NET Midstream Purchase

NextEra Energy Partners LP has agreed to pay $2.1 billion to buy NET Midstream LLC, giving it seven natural gas pipelines in Texas able to transport up to 3 Bcf/d and the potential to expand by another 1 Bcf/d.

The NextEra Energy Inc. generator is gaining its first gas system after being formed last year. In addition to its considerable gas portfolio, NextEra affiliates have a big renewable portfolio, which includes wind and solar resources.

The acquisition announced Monday gives the partnership a "presence in the long-term contracted natural gas pipeline space," the companies jointly stated. NET Midstream's largest pipeline delivers gas to Mexico under a 20-year contract with state-owned Petroleos Mexicanos.

"Natural gas demand in Mexico has been growing substantially," NextEra CFO Moray Dewhurst said during a quarterly earnings conference call on Monday. "At the same time, Mexico-based natural gas supply has been declining, which we believe increases Mexico’s need for U.S. gas."

NET Midstream's assets include NET Mexico Pipeline Partners LLC, with capacity to deliver up to 2.3 Bcf/d from the Eagle Ford Shale to Mexico (see Daily GPINov. 17, 2014). It also owns Eagle Ford Midstream, which serves producers and gas processors in the South Texas play, as well as Monument Pipeline, which serves local gas distribution customers and producers in the Houston area. South Shore Pipeline serves the gas requirements for the city of Corpus Christi, TX, while the Mission Valley and LaSalle pipelines serve power generators in South Texas.

NET Midstream is half-owned by its founders and half-owned by an affiliate of ArcLight Capital Partners, an energy-focused private equity fund.

NextEra Energy Inc. is involved in projects across the country, and among other things, owns Florida Power & Light Co., the state's largest electric utility and the nation's third largest (see Daily GPIJuly 2). NextEra and affiliates also are involved in pipeline projects in the Northeast (see Daily GPISept. 2, 2014).

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