Momentum Midstream Establishes Leading Haynesville Presence with Latest Acquisitions

Momentum Midstream LLC on Sept. 22 completed the acquisitions of Midcoast Energy LLC’s East Texas business from an affiliate of ArcLight Capital Partners LLC and Align Midstream LLC from Tailwater Capital, which the Houston-based company said establishes a leading presence in the Haynesville Shale.

Terms of the transactions were not disclosed. However, Momentum’s long-time financial partner, EnCap Flatrock Midstream, came alongside several proven institutional energy investors in Yorktown Energy Partners, Martin Sustainable Resources, Ridgemont Equity Partners, Bengas Midstream Partners and Blackstone Credit to support Momentum’s Haynesville Shale growth plans, which also include a new carbon capture project, according to EnCap Flatrock Managing Partner and Founder Billy Lemmons.

“We have been closely associated with the management team at Momentum for more than three decades and are incredibly proud to help accelerate their plans to establish a leading presence in the Haynesville Shale,” Lemmons commented in a Sept. 22 release by Momentum Midstream.

The acquisition of Midcoast’s East Texas business, known as Midcoast ETX, and Align Midstream was announced by Momentum alongside a new natural gas gathering and carbon capture project in the Haynesville Shale.

The project, New Generation Gas Gathering or NG3, will gather natural gas produced in the Haynesville Shale for re-delivery to premium Gulf Coast markets, including LNG export. The NG3 project also includes a carbon capture and sequestration component that will remove 100% of the CO₂ and permanently store it underground, creating a net negative carbon footprint.

“Pairing the extensive footprints of the Midcoast and Align assets with NG3, Momentum is able to relieve existing constraints in the Haynesville Shale, particularly the Shelby Trough, and allow our producer customers to reach premium Gulf Coast markets,” said Brant Baird, President of Momentum. “We also provide these Gulf Coast markets and LNG facilities with direct access to growing Haynesville Shale production.”

With the combined assets of Midcoast ETX and Align Midstream, Momentum is currently servicing volumes in excess of 2 Bcf/d for a diverse customer base comprised of producers, utilities, end-users and LNG exporters.

Momentum’s footprint in the Haynesville now includes approximately 3,000 miles of gathering pipelines, 1.5 Bcf/d of treating capacity, 700 MMcf/d of processing capacity, 200,000 HP of compression and 820 miles of transportation pipelines delivering gas to the Gulf Coast markets in southeast Texas and the Carthage and Bethel markets in East Texas.

NG3 FID

The board of directors of Momemtum reached a final investment decision (FID) on NG3, its new natural gas gathering and carbon capture project, the company also announced on Sept. 22.

The NG3 project is supported by an anchor commitment from Chesapeake Energy Corp. and will have an initial capacity of 1.7 Bcf/d and is expandable to 2.2 Bcf/d.

“Consistent with our past business practices, Chesapeake Energy’s anchor commitment for NG3 comes with an option to own 35% of the project, creating alignment between Momentum and one of the largest Haynesville Shale producers,” Momentum CEO Frank Tsuru said in the release.

The NG3 project will also capture and permanently sequester up to 2 million tons per annum of CO₂ and is expected to commence operations in the second half of 2024.

Combined with the existing capacity on the Midcoast system, Tsuru said the NG3 project will serve to address bottlenecks in the Haynesville Shale and provide “much needed capacity” to the growing LNG markets on the Gulf Coast.

“Our customers,” continued Tsuru noting the significant long-term volume commitments for NG3 from several leading Haynesville Shale producers in addition to Chesapeake Energy, “are also excited to be part of the first of its kind net negative gas gathering project.”

Barclays served as exclusive financial adviser to Momentum on the Midcoast ETX acquisition. Barclays also arranged the acquisition financing along with Jefferies Finance LLC, Blackstone Credit and Wells Fargo Securities LLC.

Jefferies LLC served as exclusive financial adviser to Momentum on the Align acquisition. Vinson & Elkins LLP served as legal counsel to Momentum on both the Midcoast ETX and Align Midstream acquisitions.

Jefferies LLC and Latham & Watkins LLP advised ArcLight Capital Partners LLC on the sale of Midcoast. Piper Sandler & Co. and Locke Lord advised Tailwater Capital on the sale of Align Midstream.