The Money Backers: Energy Capital Partners

The Money Backers: Energy Capital Partners

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 that give startups and growth projects liftoff.

Energy Capital Partners

Energy Capital Partners is a private equity and credit investor focused on existing and new-build energy infrastructure projects.

www.ecpartners.com

With offices in N.J., N.Y., and Houston, Energy Capital Partners (ECP) puts its capital and intuition on North American energy infrastructure that relies on contracted or fee-based revenues. This 40-year-old private equity firm zeroes in on new and existing companies with growth projects in the power generation, renewables, midstream, and environmental sectors. ECP’s most recent acquisition occurred in February with the $400 million purchase of Texas-based Centerpoint Energy’s natural gas retail business.

With $19 billion in capital commitments, ECP spreads its midstream investments across terminaling and storage; on- and offshore natural gas production facilities; petrochemicals processing and storage; gathering, processing and fractionation; and crude oil, natural gas, and water pipelines.

Here’s a look at the firm’s current midstream superstars.

  • With an initial “Let’s make some noise” of up to $500 million from ECP, Houston-based Next Wave Energy is moving forward with plans to construct its Project Traveler—a 28 MBPD, ethylene-to-alkylate plant near the Houston Ship Channel. The Traveler will convert NGL-based products like ethylene and isobutane into gasoline blend stock then pipe the produced alkylate to two gasoline-blending and marine terminal facilities in Pasadena. The plant is scheduled for production in mid-2022.
  • From its headquarters in Eddy County, N.M., Sendero Midstream operates the Sendero Carlsbad Gathering and Processing system. Located in the heart of the Northern Delaware sub-basin, the Carlsbad system includes 100 miles of gas gathering pipelines and two gas processing facilities that, together, offer 350 MMCFD of capacity.
  • Based in Houston, Summit Midstream operates natural gas, crude oil and produced water-gathering systems in the Appalachia, Williston, DJ, Fort Worth, and Permian basins. The company also holds legacy assets in the Piceance Basin, as well as the Barnett and Marcellus shale plays. Summit currently is developing the 135-mile Double E Pipeline, which will offer a capacity of 1.35 BCFD and provide natural gas transportation service from multiple receipt points in the Delaware Permian to delivery points in and around the Waha Hub. Commissioning is expected in 2021.
  • Headquartered in Houston, Targa Resources is one of the nation’s largest independent midstream companies whose assets primarily lie in Okla., Texas, N.M., La., and Ala. The company’s operations include expansive gas gathering and processing systems in multiple basins, gas transportation pipelines, and crude oil transmission and storage.
  • US Development Group brings something different to the midstream party through its design, development, and operation of large-scale crude oil terminals. A big distinction of this company is its focus on acquiring or building terminals that offer the full breadth of multi-modal options, especially by rail. USDG’s assets include crude oil logistics terminals in Alberta, Can., Casper, Wyo., and Stroud, Okla., near the Cushing Hub.
  • A relative newcomer to ECP’s investment portfolio, Symmetry Energy Solutions in February purchased CenterPoint Energy Services, the Texas utility’s unregulated gas retail platform. Symmetry sells, stores, and supplies natural gas to approximately 30,000 commercial and industrial customers, utilities, and municipalities across 35 states.

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More Midstream Alignment in the Haynesville

More Midstream Alignment in the Haynesville

Now in its third iteration as a Tailwater Capital portfolio company, Dallas-based Align Midstream continues to place its bets squarely on natural gas and the Haynesville. Align now has announced the completion of its 36-mile TOPS gas gathering line in the East Texas Carthage area that offers pipeline connections to downstream markets. The company reports TOPs will bolster its already active presence in the Haynesville. In addition, Align has formed a joint venture with Houston-based Sabine Oil & Gas to further develop TOPs. Sabine is a subsidiary of Japan’s Osaka Gas USA and marks that company’s inaugural U.S. midstream acquisition.

Align Midstream

Align Midstream Partners is a Dallas-based midstream company focused on serving producers’ needs in emerging and established basins within the US. Align is concentrated on building greenfield midstream assets including gas, crude oil and water gathering pipelines, treating and gas processing plants, and salt water disposal wells in emerging basins.

www.alignmidstream.com/home

Returning to Align’s active presence in the Haynesville, let’s take a look at where they’ve been and where they currently are.

Tailwater Capital in 2017 sold Align Midstream Partners I to Okla. City-based Enable for $300 million. That transaction included a 100 MMCFD cryogenic processing plant and 190 miles of natural gas gathering pipelines in East Texas and La.

Back for more, Align Midstream Partners II in 2018 constructed a gas gathering treatment and pipeline facility in the Haynesville to serve BP’s largest onshore drilling program. BP purchased its oil and gas assets there from BHP the same year.

As Align III, the company recently has added to its midstream infrastructure with the completion of an expandable 400 GPM amine system and a capacity of more than 200 MMSCFD of residue takeaway via NGPL and Gulf South pipelines.

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The Midstream Range Rover

The Midstream Range Rover

You could say Sugar Land, Texas-based Rangeland Energy is somewhat of a train buff when it comes to building refined products hubs. Through its various iterations as a portfolio company of private equity firm EnCap Flatrock, this midstreamer has developed crude oil distribution systems that offer access to multi-modal transportation options to deliver crude oil, natural gas, NGLs, and other petroleum products to North American markets. And rail cars play a big part in this company’s business strategy.

Rangeland Energy

Rangeland Energy is a midstream company that meets the infrastructure requirements of refiners, commodities marketers, producers and retail distributors in resource plays and growing markets.

www.rangelandenergy.com

Rangeland first developed the Bakken’s N.D., COLT Hub in 2012, which offers connections to outbound pipeline systems and crude-by-rail service. That company sold months later to what is now known as Crestwood Energy Partners.

Develop, learn, operate, exit.

And Rangeland did.

Applying its newfound knowledge of rail service and listening to market demand, Rangeland in 2013 started up its RIO Hub in the Texas Delaware sub-basin, solidifying its midstream niche to provide pipeline connections and rail services at its terminals. But this time, Rangeland also expanded its capabilities to include inbound frack sand storage and loading outbound truck services.

Two years later, Rangeland Energy with the support of its financial backer, fired up a second, simultaneous venture to develop the South Texas Energy Products System (STEPS), which began operations in 2018. The system receives and stores refined products, LPG, and other hydrocarbons at a Corpus Christi terminal and transports supplies to terminals in Mexico. The Corpus Christi terminal is strategically located along the Kansas City Southern Railroad mainline.

At the same time, Rangeland took a hard look at western Canada, where E&Ps operating in the huge Montney shale play of Alberta have battled a dearth of natural gas midstream assets to transport supplies to markets. The company created subsidiary Rangeland Canada to introduce its commercial model to an underserved area and has now announced service on its new 52-mile Marten Hills Pipeline System. The crude oil and condensate pipelines originate near Slave Lake, Alberta, and terminate at the Edmonton Hub and refining market, a major crude oil rail loading terminal.

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Precarious Times in the Midstream Bakken

Precarious Times in the Midstream Bakken

A recent one-two punch in the Rockies has left oil and gas producers and midstreamers reeling to predict an uncertain fallout from two back-to-back events in an already head-shaking year.

When Okla. City-based Chesapeake Energy officially filed for bankruptcy June 28th, a tsunami of Plan Bs—many already in place—flooded midstream operators that held contracts with producers to gather, process and flow crude oil, natural gas and NGLs from the Bakken, Powder River Basin, South Texas, and Appalachia.

Crestwood Energy

Crestwood Equity Partners LP (NYSE: CEQP) is a publicly traded master limited partnership that owns and operates midstream assets located primarily in the Bakken Shale, Delaware Basin, Powder River Basin, Marcellus Shale, Barnett Shale and Fayetteville Shale.

www.crestwoodlp.com

Now, one week later, the U.S. District Court in Wash., D.C. has handed down a decision to shut down and completely drain the 1,172-mile Dakota Access Pipeline (DAPL). DAPL is a major pipeline artery out of the Bakken, transporting 570,000 BPD of crude oil from N.D., to Ill., where it connects with Energy Transfer’s crude oil pipeline that extends to South Texas markets. Energy Transfer and its DAPL partners have 30 days from July 6 to comply with the ruling. Energy Transfer plans to appeal.

For at least one midstream operator, the untimely crush of events between Chesapeake’s bankruptcy and DAPL has resulted in a go-forward plan to assure its Bakken producer customers in these precarious times.

Houston-based Crestwood Equity Partners’ operations gobble up a chunk of the nation’s midstream map with crude oil, natural gas, and NGLs assets that include gathering and processing, storage, and transportation predominantly in the Bakken, Powder River and Marcellus. Chesapeake just happens to be a longtime Crestwood customer in the Bakken. And Crestwood’s Arrow gathering system there connects to the DAPL.

So, how does a midstream operator get ahead of two hard punches in a week?

You get in front of it. Exactly as Crestwood has. The company immediately issued an update to its shareholders ensuring it had prepared for the Chesapeake bankruptcy and remains well-positioned to maintain full operations throughout the bankruptcy proceedings to include gathering and processing natural gas with more than 320 Chesapeake wells connected to Crestwood’s Jackalope system.

In response to the DAPL situation, Crestwood has assured its customers that, no matter how the ball swings following court appeals, the company can ensure downstream market access via its Arrow system for 100% of its producer customers’ crude. The Arrow system connects to DAPL, Hiland and Tesoro pipelines. In addition, Crestwood can transport crude volumes to its COLT Hub Facility in N.D., by pipeline or truck. COLT is the leading crude oil terminal in the Bakken with multiple pipeline connections, storage capacity of 1.2 MMBbls, and rail loading capacity of 160 MBPD.

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Berkshire Hathaway Makes a New Deal-and It’s a Big One

Berkshire Hathaway Makes a New Deal-and It’s a Big One

In its largest deal in four years, conglomerate giant Berkshire Hathaway has scooped up the natural gas pipeline and storage assets from Dominion Energy in an all-cash deal valued at $10 billion. The announcement came concurrently with news that the utility giant would scrap its plans to build the 600-mile Atlantic Coast pipeline after years of costly regulatory and environmentalist battles. Two other proposed pipelines have been shelved this year in the eastern region.

Bershire Hathaway

Berkshire Hathaway is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States.

www.berkshirehathaway.com

Dominion Energy

Dominion Energy, Inc. is an American power and energy company headquartered in Richmond, Virginia that supplies electricity in parts of Virginia, North Carolina, and South Carolina and supplies natural gas to parts of Utah, West Virginia, Ohio, Pennsylvania, North Carolina, South Carolina, and Georgia. Dominion also has generation facilities in Indiana, Illinois, Connecticut, and Rhode Island.

www.dominionenergy.com

Dominion, the nation’s second-largest utility, serves 7 million natural gas and electrical power customers in 20 states from its headquarters in Richmond, Va. The company has set a net-zero emissions target by 2050, along with a five-year, $26 billion growth capital plan through ongoing investments in new technology, solar, wind, and renewable natural gas.

The sale to Berkshire Hathaway includes more than 7,700 miles of gas pipelines, 900 BCF of gas storage, a 25% interest in the bi-directional Cove Point LNG export terminal, and $5.7 billion in assumed debt. The conglomerate owns 10 other energy and energy-related companies as part of its Berkshire Hathaway Energy segment. Close of the Dominion deal is expected in 4Q this year.

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