American midstream company Williams has agreed to acquire a portfolio of natural gas storage assets located along the US Gulf Coast from an affiliate of Hartree Partners for $1.95bn.
The deal encompasses six underground natural gas storage facilities situated in Louisiana and Mississippi, which have a combined capacity of 115 billion cubic feet (Bcf).
Additionally, it involves 370km of gas transmission pipelines and 30 pipeline interconnects to various lucrative markets. These include those related to liquefied natural gas (LNG) and links to the Transco natural gas transmission pipeline.
The six natural gas storage facilities comprise four salt domes with a total capacity of 92Bcf and two depleted reservoirs with a combined capacity of 23Bcf.
These facilities have an injection capacity of 5Bcf/d and a withdrawal capacity of 7.9Bcf/d. Pine Prairie and Southern Pines, two of the facilities included in the deal, are directly linked with Transco and are said to be well-poised for potential expansions.
Williams president and CEO Alan Armstrong said: “This premier natural gas storage platform on the Gulf Coast fits squarely within our strategy to own and operate the best assets connected to the best markets to serve growing demand driven by LNG exports and power generation.
“These assets better position Williams’ natural gas storage operations to serve Gulf Coast LNG demand and growing electrification loads from data centers along the Transco corridor.
Importantly, this storage will also allow us to provide value to customers in markets with growing renewables adoption as daily peaks for natural gas increases the need for storage.”
Furthermore, Armstrong stated that since 2010, there has been a 56% growth in US demand for natural gas, whereas the increase in gas storage capacity has been only 12%. It is anticipated that the rising demand for high deliverability storage will be a driving factor for substantial earnings growth across these assets, said the CEO of Williams.
The completion of the transaction is anticipated in January 2024, subject to the fulfillment of standard closing conditions. This includes the expiration or termination of any relevant waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Williams received financial advisory services from BofA Securities, with legal counsel provided by Davis Polk & Wardwell. Hartree, on the other hand, was advised by Evercore as the lead financial advisor, with additional financial advisory support from Wells Fargo Securities.
Legal counsel for Hartree was provided by Milbank.
Recently, Williams acquired a 100% stake in Cureton Front Range and a 50% additional stake in Rocky Mountain Midstream for a total of $1.27bn in a move to strengthen its position in the DJ Basin.
