Salt Lake City-based Questar Corp.’s recently completed 77-mile Overthrust natural gas pipeline connecting with Rockies Express (REX) could be used to create a master limited partnership (MLP) that would help fund subsequent new interstate pipelines taking Rockies supplies east during the next six years, said Questar CEO Keith Rattie.
Rattie offered his current thinking about Overthrust, which began commercial operations two weeks ahead of schedule on Dec. 15, in response to a question during a year-end earnings conference call with financial analysts Wednesday. “We think Overthrust is an ideal asset for the launch of an MLP,” Rattie said. “Overthrust has recently been completed, so there is modest to minimal tax leakage associated with the transaction. We are looking at the MLP, not as a strategy, but as part of a way of funding a build-up of our pipeline business.
“We’ve talked to some other parties on a very preliminary basis about the possibility of contributing Overthrust to an existing MLP for a meaningful interest in some GP [general partnership] as well as some partnership units. If we have an opportunity to participate as an equity owner in one of the two major export pipelines that we think are going to be needed between now and 2014, one way, and an attractive way, to fund our participation is through the formation of a MLP.”
Rattie reiterated that Questar would not be looking at MLP formation as a strategy, but rather as a vehicle for financing a bigger project that helps launch a major export pipeline, which from a corporate strategy standpoint would help protect Questar’s increased capital investments in exploration and production in the Rockies.
“Overthrust provides a way to get production from the southwest part of the state to the REX pipeline at Wamsutter and Wyoming Interstate Co. at Kanda/Rock Springs,” Questar emphasizes on its website description of the new pipeline, which it said was initially subscribed for 750,000 Dth/d.
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