NextEra Energy Partners LP said Monday that it has agreed to acquire a significant ownership stake in the Atlantic Sunrise natural gas pipeline in a deal valued at $1.37 billion.
NextEra is buying Meade Pipeline Co. LLC, which holds a 39.2% interest in the Central Penn Line (CPL), the 185-mile greenfield portion of the Atlantic Sunrise project, which came online in October 2018 and expanded the Transcontinental Gas Pipeline (Transco) to move 1.7 Bcf/d of natural gas from Northeast Pennsylvania to markets in the Mid-Atlantic and Southeast. Transco owns a 61% stake in CPL.
For NextEra, which owns U.S. wind and solar projects, along with seven natural gas pipelines in Texas, the deal expands its holdings of long-term contracted pipelines and helps to “mitigate any potential resource volatility in the portfolio,” said CEO Jim Robo. The transaction is expected to close in 4Q2019.
Transco, which has contracted 100% of the capacity on CPL to nine shippers, has a minimum 14-year lease with Meade for its interest in the system. Under the lease, Meade receives a fixed annual payment from Transco, eliminating volumetric risk on the pipeline, NextEra said.
Included in the deal is a $90 million future expansion opportunity that would add an estimated 600 MMcf/d of capacity to CPL through the addition of compression at new and existing stations.
Meade would own 40% of the expanded capacity and receive an additional fixed-lease payment from Transco for 20 years from the in-service date, which is expected in mid-2022. Transco has already filed an application at the Federal Energy Regulatory Commission to expand the line.
In 2014, AltaGas Ltd. subsidiary WGL Midstream Inc. was joined by Vega Energy, Cabot Oil & Gas Corp. and equity provider Energy Investors Fund to form Meade and jointly own CPL.
Cabot, which has 1 Bcf/d of capacity on Atlantic Sunrise, disclosed Monday that it would receive proceeds of $256 million for its 20% ownership interest in Meade. Those funds, Cabot said, would be returned to shareholders via the company’s dividend and share repurchase program.
Calgary-based AltaGas also disclosed that it would receive $657 million in proceeds for WGL’s 55% interest in Meade. AltaGas has now sold or announced $2.2 billion in assets sales this year, including its portfolio of U.S. distributed generation assets and its interest in another Appalachian pipeline, the Stonewall Gas Gathering System, as it focuses more on its utilities.