German utility RWE Group has agreed to acquire a 50% stake in Excelerate Energy LLC for approximately $500 million, the companies announced Thursday. The transaction remains subject to certain closing conditions including approval by U.S. anti-trust regulators.
The partnership will combine the upstream equity assets of RWE, a major European integrated electricity and natural gas company, with Excelerate’s growing market access points, liquefied natural gas (LNG) infrastructure and proprietary technology, they said.
“Together, we believe we can grow the LNG business significantly over the coming years,” said Excelerate CEO Rob Bryngelson. “This partnership aligns both companies’ strengths in a way that will support the growth of the business, enable us to more fully leverage the flexibility our technology provides along the LNG value chain and to maintain our innovative leadership in offshore LNG.”
Founder George B. Kaiser will continue to own the remaining 50% of Excelerate and the company’s management and staff will remain in place.
Rumors of a possible sale of Excelerate have circulated in the industry for some time. In December Reuters reported that a source at Excelerate confirmed “exclusive conversations with RWE” about a possible sale (see Daily GPI, Dec. 7, 2007).
Since it was formed in 2003, The Woodlands, TX-based Excelerate has shown some success utilizing proprietary technology allowing LNG to be regasified onboard specially designed regasification vessels. Excelerate currently operates four LNG vessels, three of them with onboard regasification equipment. The fleet could be increased to nine vessels by 2010.
Excelerate’s LNG projects have been able to overcome hurdles which have tripped up some other LNG proposals. Excelerate’s Gulf Gateway Energy Bridge Deepwater Port, located offshore Louisiana in the Gulf of Mexico, received its first LNG cargo in April, 2005 (see Daily GPI, April 7, 2005). It was the world’s first offshore receiving facility and the first new LNG regasification facility in North America in over 20 years. Gulf Gateway is capable of delivering natural gas at a baseload rate of 500 MMcf/d, with peak rates up to 690 MMcf/d.
Construction has been completed on Excelerate Energy’s Northeast Gateway deepwater LNG port off the coast of Massachusetts — the first new LNG terminal built on the East Coast in three decades — and the company is awaiting its final operating permits from the U.S. Coast Guard (see Daily GPI, Jan. 8). With peak deliveries of up to 800 MMcf/d, Northeast Gateway will be able to deliver about 500 MMcf/d into the New England market during normal operations, or approximately 20% of that market’s current annual consumption. The deepwater port will be operated by Skaugen Offshore and will accommodate Excelerate’s fleet.
Excelerate also owns and manages the Teesside GasPort LNG facility in the United Kingdom.
The key to Excelerate’s success may be the proprietary Energy Bridge technology. Excelerate purchased the Energy Bridge technology from El Paso Corp. in 2003 (see Daily GPI, Dec. 18, 2003; March 30, 2004).
Last month Excelerate entered into a revaporized LNG off-take purchase arrangement entitling DB Energy Trading LLC, a subsidiary of Deutsche Bank AG, to sell Excelerate Energy’s revaporized LNG delivered via Excelerate’s Energy Bridge at the Gulf Gateway and the Northeast Gateway deepwater ports for an undisclosed tenor (see Daily GPI, Jan. 18).
RWE Group’s operations have been focused on Germany, the United Kingdom and Central Eastern Europe. The company’s activities include power generation, distribution, transmission and sales, and natural gas exploration, production and sales.
“The gas market is growing and LNG will play an increasingly important role because of its flexibility and its potential for covering demand peaks,” said Stefan Judisch, CEO of RWE subsidiary RWE Gas Midstream. “Excelerate’s business also provides an ideal link between [RWE’s] gas exploration and production activities, particularly in North Africa, our customers and the global gas market.”
RWE is a partner in the Snohvit gas field in the Barents Sea, which began production last fall with some of the output bound for the United States in the form of LNG (see Daily GPI, Sept. 24, 2007). The Snohvit project, which is operated by Norway’s Statoil, was the first gas development in the Barents Sea and involved the construction of the first LNG plant in arctic conditions.
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