A pair of investment deals announced Wednesday would provide approximately $470 million for much-needed midstream infrastructure in North American shale plays.
New York-based Highstar Capital IV LP said it will invest up to $270 million in independent midstream energy company Caiman Energy LLC through a preferred equity investment. Caiman, which is privately held by EnCap Flatrock Midstream's Energy Infrastructure Fund, operates in the rich gas areas of the Marcellus Shale, providing services including gas and condensate gathering, compression, dehydration, measurement, treating and conditioning, processing, and liquids transportation and fractionation.
The investment will provide Caiman with additional growth capital to fuel ongoing expansion of its midstream infrastructure network, the companies said.
Dallas-based Caiman expects to invest more than $400 million for new infrastructure in the Marcellus Shale by the end of this year, according to Caiman CEO Jack Lafield (see Shale Daily, Jan. 28). In January the company completed a 120 MMcf/d cryogenic processing plant in the Marcellus in Marshall County, WV, and, prompted by drilling projections from existing and potential customers, said it would open a 200 MMcf/d facility at the same location later this year.
In a separate deal announced Wednesday, Tradition Midstream LLC said it has closed a $200 million equity commitment from Denham Capital.
"There is a tremendous opportunity for an established midstream management group to assist producers and consumers in developing, constructing and operating infrastructure in emerging shale plays across the U.S.," said John O'Shea, CEO of The Woodlands, TX-based Tradition.
The United States and Canada will require an annual average natural gas midstream infrastructure investment of $8.2 billion over the nearly 25-year period from 2011 to 2035, according to a recent study sponsored by the Interstate Natural Gas Association of America Foundation (see Shale Daily, June 29).