Enbridge has agreed to form a midstream joint venture (JV) with WhiteWater, I Squared Capital, and MPLX pertaining to the supply of natural gas drawn from the Permian Basin, US.
The JV will develop, build, own, and operate natural gas pipeline and storage assets to address growing liquefied natural gas (LNG) and US Gulf Coast (USGC) demand.
Enbridge will hold a 19% stake in the JV, while WhiteWater and I Squared will have a combined 50.6% share. The remaining 30.4% stake will be owned by MPLX.
As per the terms of the agreement, Enbridge will contribute its 100% owned Rio Bravo pipeline project and around $350m in cash for the JV stake. The Canadian midstream firm will retain an economic interest of 25% in the pipeline project as part of its investment.
The Rio Bravo pipeline, which will be about 220km long, is being built to bring natural gas from the Agua Dulce supply area to the Rio Grande LNG project owned by NextDecade in Brownsville, Texas.
The JV will combine the Rio Bravo pipeline project with the nearly 724km long Whistler natural gas pipeline, which connects the Permian Basin to Agua Dulce, Texas. Currently, the Whistle pipeline is owned jointly by WhiteWater and MPLX.
According to the parties, the JV will also include 70% ownership in the proposed 64km long ADCC natural gas pipeline, owned by Whistler Pipeline and Cheniere Energy. This intrastate pipeline is expected to bring 1.7 billion cubic feet per day (Bcf/d) of gas from the Whistler gas pipeline’s terminus in Agua Dulce to the Corpus Christi LNG export facility owned by Cheniere Energy.
The new JV will have a 50% stake in the Waha Gas Storage project. Owned by WhiteWater, Waha Gas Storage is made up of underground salt caverns located in Pecos County, Texas with a storage capacity of around 2Bcf.
Enbridge EVP and gas transmission and midstream president Cynthia Hansen said: “Acquiring a meaningful equity interest in an integrated Permian natural gas pipeline and storage network that is directly connected to our existing infrastructure at Agua Dulce through this JV with WhiteWater/I Squared and MPLX is very exciting.
“This is a great way to enhance our super-system approach, bringing energy supply to places where it is needed most and providing last mile connectivity to domestic and export customers.”
The JV deal, which is contingent on the necessary regulatory approvals and other conditions, is anticipated to close in Q2 2024.
WhiteWater will continue to operate the assets involved in the JV, including the Rio Bravo pipeline project.
WhiteWater CEO Christer Rundlof said: “This strategic transaction is a win for WhiteWater/I Squared and MPLX. It extends the average contract tenor, brings us closer to an important strategic partner in Enbridge and positions us well for future development opportunities supporting Gulf Coast LNG.”
