LNG

Kinder Morgan Inc., the US natural gas pipeline giant and a shareholder in the Elba Island LNG export plant in Georgia, has sold part of its stake in the liquefaction plant.

KMI said it sold a 25.5 percent equity interest in Elba Liquefaction Company (ELC) to “an undisclosed financial buyer” for around $565 million.

After the close of the transaction the Houston, Texas-based company would own 25.5 percent of Elba Island, the same as the mystery buyer.

New York-based Blackstone Credit, a hedge fund and investment arm of the Blackstone Group, would continue to hold a 49 percent interest in ELC, which is now the majority holding.

KMI said the proceeds from the sale would reduce short-term debt and create additional capacity for “attractive investments” including “opportunistic” share repurchases.

It added that the value of the equity interest implied an enterprise value of ELC amounting to $2.3 billion, which is approximately 13 times 2022 gross earnings.

The ELC joint venture was formed in 2017 to construct and own the 10 modular liquefaction units in operation at Elba Island and KMI would continue to operate the facility.

The export plant is supported by a 20-year contract with Shell LNG North America for 100 percent of the liquefaction capacity.

Critical asset

“We are pleased to welcome a new partner into the ELC joint venture,” said KMI’s Interstate Natural Gas President Kimberly Watson.

“Recent geopolitical events have proven how critical liquefied natural gas infrastructure is to meeting global energy demand,” added Watson.

“We believe this investment further shows the value of LNG and demonstrates the important role it will play for decades to come,” she stated.

The Elba Liquefaction facility is in Chatham County in Georgia, near the city of Savannah, and produces around 2.5 million tonnes per annum of LNG from its 10 Trains using Shell processing technology.

In the operational plan, ELC then delivers the LNG to Southern LNG Co. (SLNG) for export.

KMI owns 100 percent of SLNG, which owns and operates the Elba Island LNG Terminal, including the LNG storage tanks and the ship dock for import and export.

The statement added that Bracewell LLP served as legal advisor to KMI for the transaction.

Golar LNG Ltd, the operator of conventional carriers, floating import and export terminals and a power affiliate backed by its fleet of 27 ships, is expanding its floating LNG relationship with US processing technology firm Black and Veatch into activities such as “green” LNG and hydrogen.

Golar offers its experience of delivering and operating low-cost floating LNG infrastructure while B&V, based in Overland Park in Kansas, is a leading provider of LNG technology, particularly for topsides of floating LNG production hulls.

“Within 2020, Golar and B&V intend to jointly publish a ‘thought leadership paper’ on our first area of interest for collaboration, floating ammonia production with carbon capture and storage (Floating Blue Ammonia),” said a statement.

Golar also operates with its Golar LNG Partners affiliate whose fleet comprises 10 vessels, including conventional carriers, FSRUs and the converted floating liquefaction hull the “Golar Hilli Episeyo” operating offshore Cameroon. Another hull of an older LNG carrier is being converted for an FLNG project offshore Mauritania and Senegal in West Africa.

In subsequent months, Golar and B&V intend to focus on the technical and commercial viability of the most prospective floating applications of the green and blue technologies and areas of interest they intend to investigate.

Any project development and implementation that followed the initial studies would be subject to a separate commercial agreement between the two companies.

“Replacement of coal, fuel oil and diesel with cleaner burning LNG represents one of the easiest and most cost-effective near-term steps to decarbonize the worlds energy mix,” explained Golar Chief Executive Iain Ross.

Golar, whose shareholders include more than 15 major global investment banks and funds, many based in New York, also has a joint venture, formerly known as Golar Power but now called Hygo Energy Transition, with the fund Stonepeak Infrastructure Partners.

Its activities are centred on northeast Brazil, including a project in Sergipe, the smallest Brazilian state.

Hygo Energy has also signed an accord with the Brazilian state government of Pernambuco to develop an LNG import terminal in the Port of Suape.

Additionally, Hygo Energy recently appointed a new Chief Executive to replace the previous incumbent who decided to step down after being caught up in a Brazilian corruption investigation.

Hygo Energy subsequently named Paul Hanrahan, the former President and CEO of power producer and LNG terminal owner AES Corp. from 2002 to 2011, as the new CEO to replace Eduardo Antonello.

Golar LNG CEO Ross explained that the shipping company and Hygo Energy were well positioned to expand on their quick delivery infrastructure solutions and emerging use of bio LNG, made from waste flows.

Ross added that his company has a history of championing and delivering solutions to problems in its industry, and he cited the Environmental, Social, and Corporate Governance (ESG) agenda, which is the mantra that is now part of the investment creed of the “green” banking community on Wall Street.

“Golar looks forward to working with a likeminded and equally capable partner, in the field of floating ammonia and hydrogen production, carbon capture, and other decarbonisation initiatives,” stated Ross.

Hoe Wai Cheong, President of Black & Veatch’s oil and gas business, said the new collaboration builds on years of delivering commercial and technology innovation with Golar in monetizing natural gas reserves.

“Given hydrogen and ammonia’s use in many energy-intensive industries we can make meaningful progress in lowering the carbon footprint and help these industries meet new sustainability commitments,” stated the head of B&V oil and gas.

The Australian Competition and Consumer Commission said it would not oppose the proposed acquisition of Refinitiv Parent Limited (Refinitiv), the analytics and data firm covering financial and energy markets, by the London Stock Exchange Group in a £24 billion (US$31Bln) deal.

US pipeline company Kinder Morgan and its equity fund partners have received a permit from the US Department of Energy to export domestic natural gas from the Gulf LNG export project proposed at the site of an existing import terminal near Pascagoula in Mississippi.

“This announcement advances the Trump administration’s commitment to energy security here at home and for our friends abroad,” said US Energy Secretary Rick Perry.

“Increased amounts of US LNG on the world market benefit the American economy, American workers and consumers and help make the air cleaner around the globe,” added Perry.

The DoE permit gives the Gulf project the authority to export up to 1.53 billion cubic feet per day of natural gas from the liquefaction plant being built near Pascagoula.

Gulf LNG is “authorized to export this LNG by vessel to any country with which the US does not have a free trade agreement (FTA) requiring national treatment for trade in natural gas, and with which trade is not prohibited” by US law or policy.

The Gulf terminal is to be transformed into a liquefaction plant to produce an initial 11.5 million tonnes per annum of LNG for export.

The facility is located next to the Bayou Casotte Navigation Channel and already includes a five-mile send-out pipeline and two LNG storage tanks, each with a capacity of 160,000 cubic metres.

The Gulf project was the fifth US liquefaction and export venture approved by the Federal Energy Regulatory Commission in 2019 when it issued construction permits on July 16.

“The US is in another year of record-setting natural gas production,” said Steven Winberg, Assistant Secretary for Fossil Energy at the DoE.

“I am pleased that the Department of Energy is doing its part to bring about an efficient regulatory system that allows for additional US energy to find its way into the global market,” added Winberg.

Including the Gulf LNG permit, the DoE said it had approved 34.52 Bcf per day of exports to non-free trade agreement countries.

Of this approved amount, around 14 Bcf per day is in various stages of operation and construction, with four LNG export projects currently operating and two more expected to come on stream soon.

The Pascagoula facility had originally been constructed to import LNG cargoes from Angola in southwest Africa before the US shale-gas boom from a production plant developed by international oil companies, including Chevron Corp.

It was originally owned by US pipeline company El Paso and later acquired by Kinder, which has sold 50 percent of the project to US equity funds.

These include 30 percent held by Thunderbird LNG, a unit of the Blackstone Group of fund managers.

The remaining 20 percent is held by Gulf LNG Holdings, comprising Arc Logistics Partners and Lightfoot Capital Partners equity funds.

It is interconnected to several downstream pipelines, including Transco, Florida Gas Transmission, the Destin Pipeline and the Gulfstream Natural Gas Pipeline from where feed-gas can be transported for processing and export from Pascagoula.

Kinder is currently in the process of completing a second LNG export project it is developing, the Elba Island facility near Savannah in the state of Georgia.

US pipeline company Kinder Morgan and its equity fund partners have made more regulatory progress in their development of the Gulf LNG export project proposed at the site of the existing import terminal at Pascagoula in Mississippi.

The US Gulf LNG export project proposed by pipeline company Kinder Morgan for Pascagoula in Mississippi is moving forward on the regulatory front with the Federal Energy Regulatory Commission and other agencies.

Gulf LNG is an existing import terminal that is being transformed into a liquefaction plant to produce around 11.5 million tonnes per annum of LNG for export.

The Pascagoula terminal had originally been constructed to import LNG cargoes from Angola in southwest Africa from a production plant developed by international oil companies, including Chevron Corp.

However, the US shale-gas boom made LNG imports into the US uneconomic and Kinder later decided to consider the export option.

Gulf LNG, co-owned by Kinder Morgan and several US equity funds, has just notified the FERC about the progress of the project and the issue of the final environmental impact statement.

The company said that on March 15, 2019, the Pipeline and Hazardous Materials Safety Administration, now playing a more active part of the FERC process, issued its letter of determination.

This stated that it had reviewed the company’s application and determined that it had demonstrated that the siting of the project complies with Federal Pipeline Safety Standards.

In addition, the company had submitted three replies through March 4, 2019, to data requests from FERC staff on the Draft Environmental Impact Statement (DEIS).

Gulf LNG added that it was working on an update to the Mississippi Department of Environmental Quality’s Permit to Construct and Operate Air Emissions Equipment and an update to the US Army Corps of Engineers certification in relation to the Rivers and Harbors Act.

“The comment period on the DEIS closed on February 25, 2019 and FERC is presently engaged in drafting the Final Environmental Impact Statement,” said Gulf LNG.

The Gulf terminal was originally owned by US pipeline company El Paso and later acquired by Kinder, which has sold 50 percent of the project to US equity funds.

The Pascagoula terminal is located next to the Bayou Casotte Navigation Channel and already includes a five-mile send-out pipeline and two LNG storage tanks, each with a capacity of 160,000 cubic metres.

It is interconnected to several downstream pipelines, including Transco, Florida Gas Transmission, the Destin Pipeline and the Gulfstream Natural Gas Pipeline from where feed-gas can be transported for processing and export from Pascagoula.

This is Kinder's second LNG export project and it is currently completing the Elba Island export plant near Savannah in the state of Georgia.

In addition to the storage tanks and pipeline, the terminal has a single dock facility that is currently permitted to receive LNG carriers of up to 170,000 cubic metres capacity and is designed to handle even larger vessels.

An earthen berm would also be constructed extending from the northeast to the southeast boundaries of the terminal expansion site. This would be connected to new segments of the storm surge protection wall on the coast.

The project is 50 percent owned by Kinder Morgan subsidiary Southern Gulf LNG Company, while 30 percent is held by Thunderbird LNG, a unit of the Blackstone Group fund managers.

The remaining 20 percent is held by Gulf LNG Holdings, comprising Arc Logistics Partners and Lightfoot Capital Partners equity funds.

Enagas, the Spanish natural gas network and LNG terminal owner, has entered the US energy infrastructure market by investing in Tallgrass Energy, whose assets include 11,000 kilometres of transmission pipelines.

The Spanish company said the transaction is part of its strategy to invest in core business assets in growth markets on an international basis alongside strategic partners.

Enagas, which already has investments in LNG import terminals on the American continent, at Altamira in Mexico and Quintero in Chile, has entered into an agreement with the equity funds, Blackstone of the US and GIC of Singapore, to invest $590 million for a 10.93 percent indirect ownership interest in Tallgrass Energy.

Tallgrass, based in Leawood in the Midwest state of Kansas, has assets including the Rockies Express Pipeline, one of the largest US pipelines that is being transformed into the nation’s northernmost bi-directional natural gas gathering system.

Enagas explained that its investment is in the holding company that owns 100 percent of TGE’s general partner, as well as 43.91 percent of the economic interests in TGE .

The investment is structured so that Blackstone retains a majority stake, GIC has a minority shareholding, as does Enagas with 24.90 percent of the holding company.

Following the closing of the transaction, Enagas has agreed to acquire an additional 3.52 percent of the holding company for around $83M, subject to completion of certain conditions. The Spanish company has also agreed to future investments of up to $300M in TGE.

“As an industrial partner, Enagas will have a seat on the company's Board of Directors, contributing its know-how in operating and developing energy infrastructure,” said Enagas.

Enagas has four domestic LNG import terminals around Spain at Barcelona in the northeast, Cartagena in the southeast, Huelva in the southwest and Gijon in the northwest.

It also owns a 50 percent stake in the facility serving the northwest city of Bilbao.

Other investments held by Enagas include its stake in Trans Adriatic Pipeline, part of Europe’s Southern Gas Corridor.

It is also part of a European gas grid group that acquired control of the Greek natural gas transmission operator DESFA.

“Enagas embarked on its internationalisation in 2011 as a part of an ongoing strategy with two main objectives, maintaining the maximum efficiency and security in the operation of the Spanish gas system, and to continue expanding as a company,” it said.

“This international expansion also helps drive the business of other Spanish industrial companies related to the energy sector,” added Enagas.

“This acquisition allows Enagas to unlock the value of its vast experience in developing and operating gas infrastructure and strengthen its position as industry leader and expert,” stated the company.

Wallace Henderson, Senior Managing Director in Blackstone Infrastructure Partners, said he was delighted Enagas had joined the investment consortium.

“With extensive midstream operations around the world, they bring valuable perspectives to Tallgrass that will benefit our investment and we look forward to their contributions,” added Henderson.

Kinder Morgan, the US pipeline and infrastructure company, is advancing again with its Gulf LNG export project at an existing terminal in the port of Pascagoula in the state of Mississippi.

Sanchez Energy Corp, the Houston-based company with previous downstream LNG ambitions, has partnered with the New York-based Blackstone equity fund group to acquire 318,000 operated acres in the Western Eagle Ford shale play in south Texas for $2.3 billion.