Tenaska Capital Management LLC (TCM) and Energy Spectrum Partners V LP said Monday they have formed and plan to jointly operate Frontier Gas Services LLC to acquire, develop, own and operate natural gas infrastructure primarily in the Midcontinent, Permian Basin, East Texas and unconventional shale plays across the United States. The partnership pledged “at least” $250 million to fund the development.

TCM, an affiliate of Tenaska Energy Inc. and the manager of the $2.4 billion TPF II LP private equity fund, was unveiled in early June to acquire and develop U.S. midstream natural gas assets through portfolio company Voyager Midstream LLC (see Daily GPI, June 2). Voyager, based in Houston, was formed in August 2008 by TPF II LP. Energy Spectrum is a midstream-focused private equity fund. Together TPF II and Energy Spectrum are to own a majority interest in the joint venture (JV) and plan to invest at least a quarter of a billion dollars in Frontier Gas.

Frontier would own an interest in and be the JV’s day-to-day manager, responsible for originating and completing investment opportunities, said TCM. To initially capitalize Frontier Gas, Energy Spectrum and Frontier would contribute from their existing midstream partnership the 36 MMcf/d Indian Creek natural gas processing facility in Roberts County, TX, with production from the Granite Wash formation.

“The joint venture underscores our commitment to the midstream natural gas sector as an attractive, long-term investment opportunity,” said TCM Senior Managing Director Daniel E. Lonergan. “By combining the many strengths of TPF II, Energy Spectrum and Frontier, we have created a firm that has the resources and management talent to identify and build sustainable value in the domestic midstream natural gas sector. In addition to our Voyager midstream portfolio company and our direct investments in the space, the joint venture provides us with a diversified platform from which we can deploy our capital to what we think is a very promising growth sector.”

Frontier Energy Services LLC, headquartered in Tulsa, was founded in 2002 by President Dave Presley. Frontier specializes in acquiring and commercially developing midstream natural gas assets.

“The joint venture provides us with a strong and more expansive platform to continue to grow our existing asset base,” said Presley. “I have long admired Tenaska and the TCM team, and our team and long-time partner Energy Spectrum are pleased that we will have the opportunity to work with them to build a midstream-focused natural gas business through acquisitions and greenfield development projects.”

Energy Spectrum President Tom Whitener said his firm had been “long-standing investors” in Frontier and wanted to continue to partner with the executives as they entered a “new phase in their evolution.” Energy Spectrum Capital was founded in 1996 to manage private equity funds.

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