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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Black Bear Makes Another Meaty Acquisition

Black Bear Makes Another Meaty Acquisition

Since its creation last December as a portfolio company of private equity firm Basalt, Houston-based Black Bear Transmission has had its eyes on the prize of acquiring natural gas midstream assets that serve utilities and end-users across the Southeast. And it’s just made another one that fits like an absolute glove.

Black Bear Transmission

Black Bear Transmission LLC transports and delivers natural gas from various pipeline receipt points to power generation, industrial and utility customers in the Southeast U.S. The company includes eight regulated natural gas pipelines stretching more than 1,200 with total delivery capacity of more than 1.8 Bcf/d. The pipelines are connected to 12 major long-haul pipelines, ensuring reliable gas supply to customers across Alabama, Arkansas, Louisiana, Mississippi, Missouri, Oklahoma and Tennessee.

www.basaltinfra.com

 

But a little history first to understand how quickly Black Bear has sought out prime assets in its targeted region.

The company in December completed its acquisition of Third Coast Midstream’s natural gas transmission business, which included seven pipelines stretching 550 miles with connections to eight major long-haul gas pipelines across La., Ala., Miss., Tenn., and Ark. In April, Black Bear snatched up Ozark Gas Transmission and Ozark Gas Gathering from Enbridge. This acquisition added a 367-mile interstate gas pipeline system that runs from southeastern Okla., through Ark., to southeastern Mo., and more than 330-miles of gathering pipe connecting regional production into the Ozark pipeline.

Black Bear’s midstream assets grew to a total of eight natural gas pipelines extending more than 1,200 miles with delivery capacity of more than 1.8 BCFD, and connections to 12 long-haul pipelines. And this bear wasn’t done yet.

As Third Coast Midstream renewed its focus on core operations along the Gulf Coast, including the company’s offshore infrastructure platform, Black Bear saw another opportunity to contiguously expand its Southeast footprint and grow its pipeline system.

Black Bear Transmission now has announced a second bolt-on acquisition from Third Coast Midstream. The company’s latest deal includes the purchase of six intrastate natural gas pipelines that span 1,400 miles in Ala., La., and Miss., with a total capacity of more than 800 MMCFD. The transaction is expected to close in 2Q 2020.

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National Fuel Grows Its Energy Empire

National Fuel Grows Its Energy Empire

N.Y.-based National Fuel Resources has once again diversified its midstream capabilities with the acquisition of a crude oil terminal in Gibson, La., by the company’s Empire Pipeline subsidiary. Previously owned and operated by Equilon (Shell Oil Products and Shell Oil Co.), the new assets mark Empire’s first entry into crude oil terminalling—an area it plans to grow through future acquisitions.

National Fuel Reources

National Fuel Resources, Inc. (NFR) is among the largest non-utility suppliers of natural gas in this region. For more than 25 years, NFR has been helping businesses in New York and Pennsylvania with their natural gas costs.

www.nfrinc.com

Located in Terrebonne Parish near the Intracoastal Waterway, the Gibson Terminal offers 300,000 barrels of tank storage along with barge loading and unloading and a truck receiving station. The facility handles sweet and sour crude from the Eagle Ford, Permian, and Bakken via the Ship Shoal Pipeline System, the Atchafalaya Pipeline, and the Magellan Pipeline. Empire says it also plans to build a bi-directional pipeline connection to Shell’s 350-mile Zydeco pipeline.

National Fuel in May acquired Shell’s upstream and midstream gathering assets in Pa., for $541 million. The transaction included 200,000 acres in Tioga County, with net proved developed gas reserves of approximately 710 BCF, 142 miles of gathering pipe, and more than 100 miles of water pipelines—all of which support the production operations.

National Fuel’s business segments include a natural gas utility, exploration and production, natural gas transportation pipelines and storage, and natural gas gathering.

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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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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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