Kinder Morgan Inc. (KMI) has agreed to accumulate NextEra Power Companions LP’s South Texas pure gasoline enterprise, South Texas Midstream LLC (STX Midstream), for $1.8 billion.
The STX Midstream system contains 462 miles of pure gasoline pipelines with 4.9 Bcf/d of transport capability connecting the Eagle Ford Shale with rising demand in Mexico and alongside the U.S. Gulf Coast.
The system “is extremely contracted, with a mean contract size over eight years,” KMI stated. “Roughly 75% of the enterprise is supported by take-or-pay contracts.” The typical contract time period is greater than eight years with a “favorable renewal outlook,” based on KMI.
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Capability holders primarily embody direct end-use demand prospects corresponding to Mexican state oil firm Petróleos Mexicanos (Pemex), energy turbines and native distribution corporations or LDCs.
“This can be a very enticing acquisition for KMI,” stated the agency’s Sital Mody, president of pure gasoline pipelines. “STX Midstream properly enhances our current property and can allow us to seize incremental alternatives serving LNG, energy era, LDC prospects and exports to Mexico.”
STX Midstream’s holdings embody a 90% curiosity within the 2.2 Bcf/d NET Mexico Pipeline, which transports gasoline from the Agua Dulce hub in Nueces County, TX, to the Mexico border at Rio Grande Metropolis. MGI Enterprises, a Pemex affiliate, owns the opposite 10%.
STX Midstream additionally owns and operates Eagle Ford Midstream (EFM), a 158-mile, 1.1 Bcf/d residue line connecting the Eagle Ford to Agua Dulce. EFM “is related to a number of pipeline techniques, together with KMI’s Tennessee Gasoline Pipeline, Kinder Morgan Tejas Pipeline and Pure Gasoline Pipeline Firm of America,” KMI stated.
NGI’s Agua Dulce ahead foundation value curve for the steadiness of winter averaged a 3.4 cent premium to benchmark Henry Hub in Monday buying and selling.
Along with controlling pursuits in NET Mexico and EFM, KMI would purchase STX Midstream’s 50% stake in Dos Caminos LLC, a 158-mile, 1.1 Bcf/d pipeline delivering Eagle Ford gasoline into EFM and Texas intrastate pipelines. Howard Power Companions (HEP) operates and holds the opposite 50% curiosity in Dos Caminos.
“Dos Caminos has positioned in service a 62-mile pipeline that connects HEP’s current midstream pipeline and services in Webb County, Texas to KMI’s new Eagle Ford pipeline, which was just lately positioned in service,” KMI stated.
Lastly, KMI would purchase STX Midstream’s 100% curiosity in 5 different property that collectively comprise 109 miles of pipelines with 0.5 Bcf/d of capability, “principally supplying demand-pull prospects like energy vegetation and LDCs,” KMI stated.
The transaction is predicted to shut throughout the first three months of 2024.
Mexico’s pipeline gasoline imports from the US by way of South Texas averaged 4.12 Bcf/d over the 30-day interval ending Nov. 1, up from 3.7 Bcf/d throughout the identical interval final 12 months, based on Wooden Mackenzie information.
Throughout the firm’s third quarter earnings name, KMI CEO Kim Dang stated the agency expects U.S. pure gasoline demand to develop by greater than 20% via 2028, pushed by liquefied pure gasoline exports, pipeline exports to Mexico and energy era.
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