Enbridge is purchasing Tres Palacios, a gas storage facility in Texas, for $335 million. (Source: Shutterstock)
Enbridge is acquiring a natural gas storage facility in a deal with Crestwood Equity Partners LP and Brookfield Infrastructure Partners.
The Calgary-based midstream company is purchasing the Tres Palacios gas storage facility in Matagorda County, Texas, for $335 million, Enbridge announced on March 1.
Tres Palacios is a salt cavern natural gas storage facility located in Markham, Texas, with a working gas capacity of around 35 Bcf across three storage caverns. A fourth storage cavern working its way through Federal Energy Regulatory Commission permitting would add another 6.5 Bcf of capacity.
The facility has a maximum injection rate of 1 Bcf/d and a maximum withdrawal rate of 2.5 Bcf/d, according to regulatory filings.
Tres Palacios also owns a 62-mile gas header pipeline system that interconnects with 11 major gas pipeline connections, including with Enbridge’s Texas Eastern Pipeline.
Crestwood announced plans to sell its interests in Tres Palacios during the company’s earnings report on Feb. 21. The transaction is expected to close during the second quarter.
RELATED
M&A Drives Crestwood Equity Partners Q4 Earnings
Picking up non-core assets
Crestwood Equity Partners owns a 50.1% equity interest in the Tres Palacios joint venture, while Brookfield owns the remaining 49.9% interest. Crestwood stands to receive approximately $168 million for its interest in Tres Palacios, which the company plans to use to pay down debt.
Crestwood has worked to streamline its portfolio by expanding its footprint in oil-weighted regions like the Williston, Delaware and Power River basins, Crestwood Chairman and CEO Robert Phillips said in the company’s fourth-quarter earnings report.
Part of the firm’s strategy has been divesting away non-core and gas-weighted assets in the Barnett and Marcellus shales.
Since last summer, Enbridge has taken advantage of other companies divesting non-core midstream assets. In January, Enbridge acquired Diamondback Energy Inc.’s 10% equity interest in the Gray Oak Pipeline, which connects Permian Basin and Eagle Ford Shale crude oil to destinations on the Texas Gulf Coast.
RELATED
Diamondback Doubles Asset Sales Target to $1B, Reveals More Midland M&A
In August 2022, Enbridge boosted its stake in Gray Oak from 22.8% to 58.5% as a result of a joint venture merger transaction with Phillips 66. The additional 10% interest from Diamondback grew Enbridge’s stake in Gray Oak to 68.5%.
Enbridge will assume operatorship of the pipeline during second–quarter 2023.
Recommended Reading
From Days to Minutes: AI’s Potential to Transform Energy Sector
2024-11-22 - Despite concerns many might have, AI looks to be the next great tool for the energy industry, experts say.
Fugro’s Remote Capabilities Usher In New Age of Efficiency, Safety
2024-11-19 - Fugro’s remote operations center allows operators to accomplish the same tasks they’ve done on vessels while being on land.
Range Resources Counters M&A Peer Pressure with Drilling Efficiencies
2024-11-14 - Range Resources doesn’t feel the need to give into M&A peer pressure as it focuses on the efficient development of its current asset base, President and CEO Dennis Degner tells Hart Energy.
EnerMech Secures Contract with Major North Sea Operator
2024-11-13 - EnerMech will monitor the condition of the U.K. assets in accordance with safety and operational standards.
2024 E&P Meritorious Engineering Awards for Innovation
2024-11-12 - Hart Energy’s MEA program highlights new products and technologies demonstrating innovations in concept, design and application.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.