Enbridge is forming a joint venture to build and operate natural gas pipelines connecting gas supply from the Permian Basin to the U.S. Gulf Coast to tap into growing LNG export demand, the Canadian-based pipeline giant said on Tuesday.
Enbridge has entered into a definitive agreement with WhiteWater/I Squared Capital and MPLX LP to form a joint venture that will develop, construct, own, and operate natural gas pipeline and storage assets connecting Permian gas with the Gulf Coast.
Enbridge will own 19% of the joint venture, with the other co-owners WhiteWater/I Squared with 50.6% and MPLX with a 30.4% stake.
The assets included in the joint venture will be a 100% interest in the Whistler pipeline and 100% in the Rio Bravo pipeline project. In addition, the JV will also own 70% in the ADCC pipeline, a proposed pipeline designed to transport 1.7 Bcf/d of natural gas from the terminus of the Whistler pipeline in Agua Dulce, Texas, to Cheniere's Corpus Christi LNG export facility, and 50% in Waha Gas Storage, an around 2.0 Bcf gas storage cavern facility, with additional topside facilities capable of injection and withdrawal.
About 98% of capacity on these pipelines is contracted under long-term, take-or-pay contracts with an average contract length greater than 10 years, Enbridge said.
"Having access to new Permian natural gas infrastructure enhances and increases the visibility of our medium-term growth outlook, while being accretive to our balance sheet," Pat Murray, EVP and Chief Financial Officer of Enbridge, said in a statement.
U.S. natural gas producers and pipeline operators acknowledge there is an oversupply hanging over the market right now, but they believe that gas will continue to be in demand domestically and internationally for decades to come. Therefore, the U.S. firms see the current market slump as an inevitable bump on the road in a cyclical industry.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More