Boardwalk Pipeline Partners LP and a joint venture (JV) it has formed with an affiliate of its general partner have agreed to pay $550 million in cash to acquire Petal Gas Storage LLC and Hattiesburg Gas Storage Co. from Enterprise Products Partners LP, the companies said Monday.
Petal and Hattiesburg operate seven high-deliverability salt dome natural gas storage caverns in Forrest County, MS, with 29 Bcf of total capacity, of which approximately 19 Bcf is working gas capacity, along with about 69,0000 hp of compression, 105 miles of pipeline connecting to several major natural gas pipelines — including Boardwalk’s Gulf South Pipeline — and associated facilities. Storage capacity is fully subscribed under long-term fixed-fee contracts with a weighted-average remaining contract life of approximately seven years, according to Boardwalk.
All of those assets, along with undeveloped acreage suitable for up to six additional storage caverns — one of which is expected to go into service in 2013 — will be operated by a Boardwalk subsidiary on behalf of the JV. The deal is expected to close before the end of the year.
“The Petal and Hattiesburg companies are a great addition to our asset footprint,” said Boardwalk CEO Stan Horton. “The facilities are anchored by long-term firm agreements and approximately 80% of the existing customer base is either electric or natural gas utilities.”
Standard & Poor’s Ratings Services said Boardwalk’s credit ratings were not affected by the planned transaction.
Enterprise has sold approximately $1 billion of assets this year that were either standalone facilities or assets that were not strategic to its system, according to CEO Michael A. Creel.
“While we believe our Mississippi natural gas storage complex is one of the most attractive on the U.S. Gulf Coast, the complex is a standalone asset that does not integrate with our natural gas pipeline systems,” Creel said. Proceeds from the Boardwalk deal will be used to partially fund construction of approximately $7 billion of energy infrastructure growth projects that Enterprise currently has under development, he said.
The Federal Energy Regulatory Commission last year approved a Petal Gas Storage proposal to convert an existing salt brine storage cavern within the Petal Salt Dome for use as a gas storage cavern, and to construct pipeline facilities to connect the cavern with existing storage operations (see Daily GPI, Aug. 26, 2010). At the time, Petal Gas Storage said the expansion of its firm storage capacity with what became its seventh gas storage cavern at the site was needed to satisfy the anticipated growing demand for gas storage services in the southeastern United States.
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