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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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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The Money Backers: Cresta Fund Management

The Money Backers: Cresta Fund Management

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.

Cresta Fund Management

Cresta Fund Management is a middle-market focused private equity firm with a conservative, value-added approach to infrastructure investing. It seeks to invest in hard asset transportation, storage, and processing businesses primarily in the energy, chemicals and water sectors.

www.crestafunds.com

Dallas-based Cresta Fund Management likes good infrastructure ideas, whether they’re hatched from startups or companies that have been around awhile. This private-equity firm exclusively targets mid-market midstream investments with assets that include oil and gas pipelines, processing, and storage. And, at least for now, Cresta has found those investments squarely in Texas with typical check sizes that range between $50 and $250 million. Founded in 2016, the firm currently holds six midstreamers in its portfolio—one of which made headlines today with a new growth announcement.

  • Houston-based Easton Energy says it will expand its NGLs and olefins storage at the underground salt dome caverns in Markham, Texas. The company holds exclusive rights to develop and lease certain caverns that will support a slate of fractionators and petrochemical plants coming online this year and beyond. Easton also looks to add crude storage at the site, where it has rights to 13 caverns and 50 MMBbls of storage. Easton in March 2019 acquired 415 miles of La., and Texas Gulf Coast NGLs pipelines from Williams for $177 million in cash.
  • Sentinel Midstream, through subsidiary Texas GulfLink, is developing a crude oil deepwater export terminal 32 miles off the Gulf Coast at Freeport with the capability to load VLCCs at a rate of 1.2 MMBPD. The Texas GulfLink project will include an onshore oil storage terminal connected by a 42” pipeline to a manned offshore platform. Sentinel is headquartered in Dallas.
  • Dallas-based Ocelot Energy Management offers end-to-end management services for liquid and natural gas pipelines, processing plants, terminals, and storage facilities. Turnkey services include operations and maintenance; engineering, permitting, construction management and technical support; and financing and accounting.
  • Blackbuck Resources designs and builds produced-liquids infrastructure between well sites and processing facilities. Based in Houston, Blackbuck operates across Texas, N.M., and Okla., offering gathering, disposal and treatment solutions, as well as pond management.
  • From The Woodlands, Texas, NAmerico Energy has numerous projects on its whiteboard. Although construction has been delayed until 2021, NAmerico’s first venture will be the 445.5-mile natural gas Pecos Trail Pipeline that will provide a direct link between the Permian and Gulf Coast demand centers. NAmerico also plans to build two laterals that will include the 40-mile Midland, which will extend from Sprayberry to Sheffield, Texas, and the 55-mile Orla in the Delaware that would connect to the Pecos Trail Pipeline at the Waha hub.
  • Dallas-based startup Cornerstone Midstream has partnered with a private producer in Andrews County, Texas, to build out a midstream system in the Midland sub-basin that will include natural gas gathering and processing as well as crude oil and water gathering.

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Tumbleweed Midstream and the Helium Factor

Tumbleweed Midstream and the Helium Factor

Among our vast natural resources, the U.S. produces 75% of the world’s helium found in raw natural gas. But this valuable byproduct isn’t intrinsic in every gas deposit across the nation—as a matter of fact, it’s considered rare. Most helium-rich gas is located in Texas, Okla., Wyo., and the Kan.-Colo., border where it is cryogenically processed and liquefied for commercial use in everything from respiratory treatments, MRI magnets, fiber optic cables, semi-conductor chips, computer hard drives, microscopes, air bags and welding to—yes, helium-filled balloons. And the world is experiencing a shortage.

Tumbleweed Midstream

Tumbleweed Midstream, LLC is a privately held company focused on extracting helium from natural gas at the Ladder Creek Helium Plant in Cheyenne Wells, Colorado. 

www.tumbleweedmidstream.com

But just west of Cheyenne Wells, Colo., near the Colo.-Kan., border, the Ladder Creek helium plant and gathering system has just become busier than a one-legged man in a butt-kicking contest. Tumbleweed Midstream’s Ladder Creek cryogenic processing facility now has quadrupled its production with three new contracts that will increase the plant’s daily helium output to more than 200 MCFD and 65 MMCF per year.

Tumbleweed also has announced signing new processing agreements with suppliers who will truck unpurified helium to Ladder Creek—a process called helium tolling. The company says it purifies helium from long-distance producers from Ariz., to Canada.

Tumbleweed Midstream acquired Ladder Creek and its gathering system spanning more than 1,000 square miles from DCP Midstream in Dec. 2019. Producers in eastern Colo., and western Kan., earn premium netbacks for their helium-rich natural gas extracted and processed at Ladder Creek. Tumbleweed expects its facility to reach full capacity in the next 1-2 years and will consider expansions based on demand.

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