Green Energy Developer Bets Big on Gas
NextEra Energy Partners, a California company created in 2014 to pursue green energy opportunities, has bet big on natural gas, reaching a deal September 30 to acquire Meade Pipeline for about US$1.37bn.
Pending the receipt of required approvals, NextEra expects to close the transaction within the next 60 days.
Meade Pipeline, a private joint venture of Canadian midstream company AltaGas, independent producer Cabot Oil & Gas and US midstream developer EIF Vega Midstream, holds a 39% interest in Transco’s Central Penn Line, the greenfield portion of its recent Atlantic Sunrise expansion project, which went into service in October 2018. Atlantic Sunrise provides 1.7bn ft3/day of firm transportation service to Marcellus and Utica shale gas producers.
Transco holds the remaining 61% interest in Meade Pipeline.
In separate announcements also on September 30, AltaGas said it had sold its 55% interest in Meade for C$870mn (US$657mn), while Cabot Oil & Gas announced the sale of its 20% for US$256mn. EIF Vega Midstream, a private equity-backed unit of Vega Energy, did not release any news of the sale of its remaining 25% interest in Meade.
Transco has contracted 100% the capacity of the Central Penn Line to nine shippers, and has a minimum 14-year lease with Meade for its interest. Under the lease, Meade receives a fixed annual payment from Transco and takes no volumetric risk on the pipeline.
The transaction includes $90mn in capital contributions by NextEra over the next three years related to future Central Penn expansion opportunities. The potential expansion could add 600mn ft3/day of incremental capacity to the Central Penn Line, largely through the addition of compression at new and existing stations.
If the expansion goes ahead, Meade would own 40% of the expanded capacity and receive an additional fixed-lease payment from Transco.