Veresen has entered into an agreement with Global Infrastructure Partners to acquire GIP’s 50% interest in the Ruby pipeline system for US$1.425 billion.
Ruby is a newly-built, large-scale natural gas transmission system delivering U.S. Rockies natural gas production to markets in the western United States. The 680-mile, 42-inch pipeline has a current capacity of approximately 1.5 billion cubic feet per day (bcf/d), with expansion potential to 2.0 bcf/d through the addition of compression.
Ruby originates at the Opal hub in Wyoming and extends to the Malin hub in Oregon. The Malin hub is the main interconnect to the proposed Pacific Connector Gas Pipeline (50% owned by Veresen), which would supply Veresen’s proposed Jordan Cove LNG terminal.
El Paso Pipeline Partners, an affiliate of Kinder Morgan, holds the remaining 50% ownership interest in Ruby through a common equity interest. Kinder Morgan, North America’s largest natural gas pipeline operator, will continue to operate Ruby on a day‐to‐day basis.
“This is a rare opportunity to acquire a large interest in a core U.S. pipeline asset. Ruby is an ideal fit for Veresen because it offers immediate long-term contracted cash flows with downside protection through the preferred interest structure, and provides significant future added upside related to our Jordan Cove LNG project,” commented Don Althoff, President and CEO of Veresen.
“Concurrent with this transaction, we are pleased to announce that we have entered into an $800 million bought deal subscription receipt financing which, together with our access to sources of credit as a result of our strong balance sheet, will successfully fund this acquisition,” Althoff added.
This transaction is expected to close in the fourth quarter of 2014.
Press Release, September 23, 2014; Image: Veresen