Enbridge Enters Joint Venture to Connect Permian Basin to LNG Demand in the Gulf

By Robb M. Stewart

Enbridge will buy a stake in a new joint venture that aims to develop and operate a natural gas pipeline and storage assets which will connect the Permian Basin's natural gas supply with the growing demand for liquefied natural gas in the Gulf Coast.

The Canadian energy company said Tuesday it entered into a definitive agreement with energy-infrastructure operator MPLX, and Whitewater and infrastructure investor I Squared Capital that will see it buy a 19% stake in the venture. WhiteWater/I Squared will own a majority 50.6% interest, and MPX the remaining 30.4% of the joint venture.

The venture will own the Whistler Pipeline, a 450-mile intrastate pipeline transporting natural gas from the Permian Basin to Agua Dulce, Tx, near the starting point of Enbridge's proposed 137-mile Rio Bravo pipeline that aims to bring gas to NextDecade's Rio Grande LNG project in Texas.

The companies will also control a 70% stake in the ADCC pipeline, a planned 40-mile pipeline designed to transport gas from the terminus of the Whistler pipeline to Cheniere's Corpus Christi LNG export facility, and a 50% interest in the Waha gas storage facility.

Enbridge said when the transaction is closed it will contribute its wholly-owned Rio Bravo pipeline project and $350 million in cash to the joint venture and will fund the first $150 million in capital spending to complete the Rio Bravo pipeline. In addition to a 19% stake in the venture, Enbridge will hold on to a 25% interest in the Rio Bravo project.

The venture is projected to immediately boost cash flows for the Calgary, Alberta company, while reducing its share of future spending on Rio Bravo. The company said it also promises to unlock future growth opportunities to connect natural gas production to export markets.

In 2023 I Squared bought a controlling interest in the Whistler Pipeline, from First Infrastructure Capital, Ridgemont Equity Partners, affiliates of West Texas Gas, affiliates of Stonepeak Partners and the WhiteWater management team.

Closing of the deal is expected in the second quarter of 2024, Enbridge said.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

March 26, 2024 08:03 ET (12:03 GMT)

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