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Boardwalk to Sell Equity to Raise Funding for Pipe Projects

Boardwalk Pipeline Partners LP announced last Monday that it plans to sell $700 million of new equity to Loews Corp., which currently owns 68% of Boardwalk Pipeline's common units, to help fund its ongoing pipeline expansion projects. The transaction would raise Loews' interest in Boardwalk's common units to about 72-73%, a company official said.

The investment would be made primarily through the sale of newly created Class B limited partnership units of Boardwalk Pipeline, which has three pipeline subsidiaries -- Gulf Crossing Pipeline Co., Gulf South Pipeline Co. and Texas Gas Transmission LLC. The boards of directors of Boardwalk Pipeline's general partner (Boardwalk GP LP) and Loews have authorized the investment, subject to approval by the Conflicts Committee of Boardwalk Pipeline's general partner, as well as the completion of a definitive agreement. The transaction is expected to close by June 30.

Boardwalk Pipeline said it intends to use the proceeds of approximately $700 million to fund a portion of the costs of its many ongoing pipeline expansion projects. Its Gulf Crossing subsidiary is seeking FERC authorization to build a 353-mile, 42-inch diameter pipeline to transport natural gas from supply regions in Texas and Oklahoma to the Perryville Hub in northeast Louisiana (see NGI, July 2, 2007).

In January Boardwalk's Gulf South Pipeline subsidiary got the go-ahead from the Federal Energy Regulatory Commission to place into service 242 miles of high-pressure pipeline connecting the company's existing system in DeSoto Parish in northwest Louisiana to its 30-inch diameter pipeline in Simpson County, MS (see NGI, Jan. 21). The East Texas-to-Mississippi project provides 1.7 Bcf/d of takeaway capacity for producers in the prolific Barnett Shale and Bossier Sands trends of East Texas, as well as for the sprouting liquefied natural gas terminals along the Gulf Coast.

And last October FERC issued a certificate to Gulf South Pipeline for a second major expansion of its system that would give Texas, Oklahoma, Arkansas and Louisiana natural gas supplies greater access to Northeast, Florida and other Southeast markets (see NGI, Oct. 8, 2007). The Southeast expansion includes the construction of an 111-mile, 42-inch diameter pipeline extending from the terminus of Gulf South's 1.7 Bcf/d East Texas-to-Mississippi expansion at Harrisville, MS, in Simpson County to a new interconnect with Transcontinental Gas Pipe Line in Choctaw County, AL.

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