Midstream infrastructure operator Rangeland Energy has formed a portfolio company to pursue acquisitions and projects in conventional and unconventional natural gas and oil plays, along with “decarbonization” opportunities in North America.

Rangeland, based near Houston in Sugar Land, formed Rangeland Energy IV after securing a $300 million equity commitment from EnCap Flatrock Midstream.

“Rangeland IV will be focused on acquiring assets and developing projects that accommodate an ever-increasing global demand for traditional energy commodities while simultaneously assessing new opportunities in an evolving energy landscape,” said CEO Chris Keene.

CFO Craig Peus told NGI that Rangeland is seeking greenfield and brownfield opportunities. The company is in “early stage diligence” on several types of projects. They include crude gathering and transport, along with medium-haul natural gas pipeline, water gathering and disposal, and blue hydrogen with carbon capture and sequestration (CCS).

“Even in our traditional oil and gas midstream infrastructure projects, we will seek to minimize emissions” via greenhouse gas monitoring and capturing technology, generating power with low-carbon fuel sources and capturing carbon dioxide for sequestration, Peus said.

With the latest round of funding, EnCap has committed a total of $900 million in Rangeland companies four times since 2009.

Previous Rangeland entity investments by EnCap include the COLT hub in the Bakken Shale and Three Forks formation; the Rio System  in the Permian BasinMarten Hills Pipeline System in north-central Alberta, and South Texas Energy Products System terminal in Corpus Christi

Peus said identifying pure greenfield projects in traditional midstream is challenging given the “astounding level of infrastructure investment since the beginning of the shale revolution across all major U.S. basins.

“Nevertheless, we see global demand for oil and gas continuing to rise and believe that future capacity constraints,” notably moving gas production to the Gulf Coast and export markets, will lead to more processing and takeaway infrastructure, he said.

Rangeland focuses on opportunities in basins where it has “a history,” said Peus. He added the Haynesville Shale “is also interesting” amid “exploding demand” for liquefied natural gas (LNG) in export markets.

“We are also looking for projects in Canada, via our Calgary-based team, who have successfully developed and still operate a crude and condensate pipeline system,” said Peus.

Gas At Energy Transition’s ‘Core’

Private equity (PE) capital is not flowing back into exploration and production (E&P) at pre-Covid levels, Chiron Financial LLC’s Tom McNulty, managing director of investment, told NGI. 

However, he cautioned against assuming that gas projects face a dearth of PE funding options. Drawing such a conclusion stems from the “tendency to lump crude oil and natural gas together. This is wrong, because gas is essential to the energy transition and will need to see significant production increases here and elsewhere.”

The world is noting “how badly Europe needs LNG right now,” McNulty said. “As such, there will be more and more capital investment into natural gas in the months and years ahead, from public and private capital sources.” 

An energy transition-related area that is “rapidly growing” and attracting private capital is renewable natural gas, according to McNulty.

“More private capital is focused on natural gas, renewable natural gas, carbon capture and storage, and midstream assets that can and will support natural gas, renewable natural gas, and carbon capture and storage,” he said.

He added that including natural gas as a “core element, as it should be” of the energy transition would “drive plenty of capital into dry gas production, gathering, storage, transportation and delivery to market. Regardless of the future supply and demand balance for crude oil, a failure to make substantial capital investment into natural gas will be catastrophic.”