Natural Gas Midstream and the Energy Transition

Natural Gas Midstream and the Energy Transition

​RMR features the latest high-point news to keep you to up to date with midstream activities happening in the basins and shale plays that matter to you most.

Here Comes the Sun

As many of the world’s oil and gas giants start to implement carbon-neutral plans by 2040, midstreamers also are integrating renewables to power remote operations, lower costs, and reduce their carbon footprint. Tulsa-based Williams has announced it will add solar power as an energy source to generate electricity at 48 sites in nine states. The company says solar, in addition to natural gas, will be used to power its processing plants, compressor stations and other midstream facilities in Ala., Colo., Ga., La., N.J., N.C., Ohio, Pa., and Va. Williams says the  investment in on-site solar farms will offset the purchase of 350 megawatts of electricity.

Capstone Turbine Back to Work in the Permian Midstream

Calif.-based Capstone Turbine has received a follow-on order for more microturbines from one of the largest oil and gas midstream operators in North America. While its client wasn’t disclosed, Capstone says it will provide another three, stand-alone C65 microturbines for a remote site in the Permian. The company says six of 10 of its largest installed fleets worldwide are oil and gas customers that require reliable power generated by natural gas. To date, Capstone has shipped 10,000 units to 73 countries, saving its customers $253 million in annual energy costs and eliminating 350,000 tons of carbon.

Natural Gas Takes Lead in Energy Transition

The wave of LNG has spurred a natural gas revolution that’s nothing short of remarkable. As nations and developing countries retire coal for clean energy—especially in the global production of electricity—natural gas becomes the perfect partner with renewables like solar and wind power. The EIA has announced that renewable energy consumption now surpasses coal for the first time in more than 130 years. The International Gas Union describes natural gas as “an agent of change in the fight against air pollution,” continuing that gas provides the fastest and most economical path to a less carbon intensive and cleaner air world. The midstream sector plays a starring role in this transition to transport, process, and provide what’s become a dominant energy supply to power the world.

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The Money Backers:  KKR & Co.

The Money Backers: KKR & Co.

In RMR’s continuing series The Money Backers, we give readers a glimpse of who’s who and who owns what in energy’s private equity world.  From the largest to the smallest to the newest, we look especially at those firms making hay in the midstream industry to provide the capital infusion required to give growth projects liftoff.

KKR & Co.

KKR & Co. Inc. is an American global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate, credit, and, through its strategic partners, hedge funds.

www.kkr.com

During the “buyout boom” of the late 1980s, the biggest news to travel between the lips of Wall Street bankers and the ears of its corporate investors was the $31.1 billion buyout of RJR Nabisco. Drama surrounding the deal and its colorful actors played on magazine covers and front-page headlines as the N.Y.-based KKR investment group collected a $75 million transaction fee and secured its place in high-finance history.

Since then, KKR has risen to the ranks of one of the world’s largest investment firms with offices across the U.S., Europe, the Middle East, Africa, and Asia-Pac. KKR’s investments include oil and gas assets in the upstream sector as well as energy infrastructure across the globe. On the midstream side, the firm continues to shoot for “big” with its latest announcement to buy a 65% equity interest in TC Energy’s Coastal GasLink Pipeline project. The $6.6 billion, 416-mile Coastal GasLink will transport 2.1 BCFD of natural gas from B.C., to an LNG liquefaction and export facility also in B.C. That facility is currently under construction.

Here’s a look at KKR’s midstream portfolio companies in the U.S.:

  • Georgia-based Colonial Pipeline, the largest refined product pipelines in North America. Colonial transports more than 3 MMBbls of gasoline, diesel and jet fuel between the Gulf Coast and the N.Y., harbor area.
  • Genesis Energy, headquartered in Houston, operates four divisions that include offshore pipeline transportation, refinery services, marine transportation, and onshore facilities and transportation in Texas, La., Ark., Miss., Ala., Fla., Wyo., and the Gulf of Mexico.
  • Williams’ Rocky Mountain Midstream, the largest private natural gas gathering and processing and crude oil gathering operations in the DJ Basin. Tulsa-based Williams and KKR acquired these systems from Discovery Midstream in 2018 for $1.2 billion.

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TC Energy Soldiers On

TC Energy Soldiers On

Come rain or shine, pipeline protesters or pandemic, Alberta-based TC Energy has managed to rise above the fray as one of North America’s largest, most successful midstream players with a massive circuitry of natural gas infrastructure in the U.S. While the company continues to brave headwinds to construct the 1,200-mile Keystone XL Pipeline that would connect Canadian tar sands crude to the largest refineries in the U.S., TC Energy continues to reveal its midstream Energizer Bunny, which keeps going and going.

TC Energy

TC Energy Corporation is a major North American energy company, based in Calgary, Alberta, Canada, that develops and operates energy infrastructure in Canada, the United States, and Mexico. The company operates three core businesses: Natural Gas Pipelines, Liquids Pipelines and Energy.

www.tcenergy.com

 

RMR is following the latest two news reports from TC, which has announced the sale of its 65% equity interest in the Coastal GasLink Pipeline Project for $2.1 billion. The proposed 416-mile Coastal GasLink Pipeline which, once completed, will offer an initial capacity of 2.1 BCFPD and connect Western Canadian gas to a Canadian LNG export facility. Next up is TC Energy’s completion of the first 1.2-mile section of the Keystone XL Pipeline in northern Mont. This follows a May 15 ruling that canceled a key permit from the U.S. Army Corps of Engineers and affects all new oil and gas pipeline construction in the S.D.-Mont., area. RMR will continue to follow this.

Aside from the long-embattled Keystone XL, TC Energy is moving forward with two new natural gas pipeline expansions because you can’t put all your eggs in one basket. Allocating $1.3 billion for both projects, TC will extend its NGTL system (also known as NOVA) by 214 miles. NOVA transports gas supplies from the Western Canadian Sedimentary Basin to markets within Alberta. The company’s 10,600-mile ANR Pipeline, which extends from Alberta to U.S. LNG export facilities and other markets along the nation’s Gulf Coast, will offer more additions and compressor station modifications. The two-legged ANR Pipeline transports natural gas from Okla., Texas, and La., converges in near Chicago, and flows clean energy to Wisc., Mich., Ill., and Ohio.

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The Operators:  Outrigger Energy

The Operators: Outrigger Energy

Outrigger Energy knows when and where to pounce when it comes to greenfield midstream infrastructure in basins that sorely need it. Six years ago, this Denver-based operator swooped into the Permian where it constructed gathering pipe and gas plants in two of the basin’s richest growth areas. The company’s Delaware system included more than 140 miles of natural gas gathering pipeline, a processing facility with 70 MMCFD of capacity, and a crude gathering system with 40,000 BPD of capacity. The Outrigger Midland consisted of 100 miles of gas gathering pipeline, 10 MMCFD of processing capacity, and a crude gathering system with 40,000 BPD of capacity. Both were sold in 2017 to Houston-based Targa Resources for a dandy $1.5 billion.

Outrigger Energy

Outrigger Energy II LLC is a private, full service midstream energy company specializing in greenfield project development with current systems operating and under construction in the DJ and Williston Basins.  The company was formed in 2017 after Outrigger Energy LLC sold its assets to Targa Resources and Tallgrass Energy Partners.

www.outriggerenergy.com

Within a year of initial construction of Outrigger’s Permian assets, the company leaped on a new opportunity in the Powder River Basin where it built a complete wellhead-to-market crude oil gathering system that included pipelines, pumps, measurements and other facilities for a capacity of up to 60,000 BPD. That system also was sold in 2017 to Kansas-based Tallgrass Energy.

Then in 2018, Outrigger began development of a tri-stream midstream system in the DJ Basin to handle natural gas, crude oil, and produced water. The 60 MMCFD cryogenic processing plant, gas gathering pipe, and crude oil and produced water gathering system began service after only eight months from the start of construction. The DJ project, certainly closer to Outrigger’s Colo., home, became the company’s first telltale that it planned to narrow its geographic focus to the Rocky Mountain region.

Now, after inking a long-term gas gathering and processing agreement with Exxon Mobil’s XTO, Outrigger is headed to the Bakken where it’s building a 70-mile natural gas pipeline and initial 250 MMCFD cryogenic plant. The processing facility will offer ethane recovery and rejection capabilities with direct access to the Northern Border Pipeline for residue gas and ONEOK’s NGL pipeline.

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