Boardwalk Pipeline Partners LP and an affiliate leaped into the natural gas liquids business late Thursday by agreeing to pay $625 million in cash to buy PL Midstream, whose Choctaw and Sulphur salt dome hubs in southern Louisiana provide salt dome storage, pipeline transportation, fractionation and brine supply services for petrochemical producers in Louisiana.
The midstream operator was acquired from PL Logistics LLC, a portfolio company of Lindsay Goldberg LLC.
"The PL Midstream acquisition supports our long-term growth strategy of diversifying into industries that complement our core natural gas pipeline and storage businesses," said Boardwalk CEO Stan Horton. "This acquisition enables Boardwalk to enter the natural gas liquids business with strategically located and well contracted assets and a strong, experienced management team."
The acquisition expands Boardwalk's business "with similar operational and financial characteristics to our core businesses, yet a different commodity market environment."
Boardwalk now operates 14,300 miles of U.S. natural gas pipeline and underground storage fields with aggregate working gas capacity of 186 Bcf. Loews Corp. owns 58% of Boardwalk's equity.
The Choctaw Hub is in the Mississippi River Corridor and the Sulphur Hub is in the Lake Charles, LA, area. The combined assets include 53.5 million barrels of storage capacity, including 11.2 Bcf of natural gas, as well as the most extensive ethylene distribution system in Louisiana. The fee-based contracts have a weighted-average life of about 10 years.
In June the Federal Energy Regulatory Commission approved a proposal by PetroLogistics Natural Gas Storage LLC to expand the capacity of the Choctaw facility by 15.6 Bcf to 39.3 Bcf by acquiring and operating a third storage cavern (see Daily GPI, June 21). Choctaw's existing two caverns have 23.7 Bcf of capacity.
The company also wants to build a 13-mile, 30-inch diameter pipeline header to parallel its existing pipeline header, with interconnections with Florida Gas Transmission, CrossTex LIG Pipeline Co., Bridgeline Pipeline System and Southern Natural Gas Co. In addition, the project calls for taps to be installed on the expansion header to accommodate planned future interconnects with Gulf South Pipeline Co., Cypress Pipeline Co. and Enterprise Products Partners' Acadian Gas System.
Funding to pay for the PL Midstream acquisition is to come through a bank loan and equity contributions through a joint venture between Boardwalk and an affiliate of its general partner, Boardwalk Pipelines Holding Corp. (BPHC), which is a subsidiary of Loews. BPHC would own 67% of the joint venture's equity and Boardwalk would own the remaining stake. The acquisition is expected to close by early October.
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