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  • Enbridge to Enter into JV Connecting Permian Basin Natural Gas Supply to Growing LNG and USGC Demand
    édité le 27/03/2024


Enbridge to Enter into JV Connecting Permian Basin Natural Gas Supply to Growing LNG and USGC Demand
Enbridge Inc. ("Enbridge") (TSX: ENB) (NYSE: ENB) announced today that it has entered into a definitive agreement with WhiteWater/I Squared Capital ("WhiteWater/I Squared") and MPLX LP ("MPLX") to form a joint-venture that will develop, construct, own, and operate natural gas pipeline and storage assets connecting Permian Basin natural gas supply to growing LNG and U.S. Gulf Coast ("USGC") demand.

Highlights:

  - Acquiring a meaningful, strategic equity interest in the joint venture
  - Immediately accretive to DCF per share, with ~90% contracted cash flows
  - Receiving immediate, recurring, and growing cash flow from operating assets with minimal commodity exposure
  - Optimizes balance sheet by increasing EBITDA and reducing Enbridge's share of future Rio Bravo pipeline project capex proportional to its economic interest in that project
  - Embedded organic expansion opportunities provides attractive growth options and diversifies offtake

The joint venture will be owned by WhiteWater/I Squared (50.6%), MPLX (30.4%), and Enbridge (19.0%) and will include the following assets:

  - 100% interest in Whistler pipeline, a ~450-mile, 42-inch intrastate pipeline transporting natural gas from an interconnect with the Waha Header in the Permian Basin to Agua Dulce, TX, near the starting point of the proposed Rio Bravo pipeline
  - 100% interest in the Rio Bravo pipeline project, ~137-miles of new 42-inch and 48-inch pipelines transporting natural gas from the Agua Dulce supply area to NextDecade's Rio Grande LNG project in Brownsville, Texas
  - 70% interest in ADCC pipeline, a ~40-mile, 42-inch proposed intrastate pipeline designed to transport 1.7 Bcf/d of natural gas from the terminus of the Whistler pipeline in Agua Dulce, TX to Cheniere's Corpus Christi LNG export facility (the pipeline is expected to be in-service in Q3 2024 and is expandable up to 2.5 Bcf/d)
  - 50% interest in Waha Gas Storage, a ~2.0 Bcf gas storage cavern facility, with additional topside facilities capable of injection and withdrawal

Approximately 98% of capacity is contracted under long-term, take-or-pay contracts with an average contract length greater than 10 years. Approximately 90% of counterparties are investment grade and include leading operators in the Permian Basin.

Upon closing of the transaction, Enbridge will contribute its wholly-owned Rio Bravo pipeline project and ~US$350MM in cash to the joint venture, and will fund the first ~US$150MM of the post-closing capex to complete the Rio Bravo pipeline project. Enbridge will receive a 19% equity interest in the joint venture and retain a 25% economic interest in the Rio Bravo pipeline project (subject to certain redemption rights of the joint venture partners).

"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," said Cynthia Hansen, EVP and President, Gas Transmission and Midstream of Enbridge.

Enbridge will be contributing its Rio Bravo pipeline project, which will extend the joint venture's current infrastructure to serve LNG and other customers on the USGC. Enbridge's share of the post-closing capex to complete the Rio Bravo pipeline project will be 100% of the first ~US$150MM and, thereafter, proportionate to its aggregate economic interest in that project.

This transaction is expected to unlock future growth opportunities for Enbridge to connect sustainable natural gas production to export markets as part of its USGC strategy.

"The transaction optimizes our investment capacity by increasing the efficiency of our capital. We will begin receiving immediate cash flow and will share in future growth opportunities," said Pat Murray, EVP and Chief Financial Officer of Enbridge. "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."

Closing is expected in the second quarter of 2024, subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.

About Enbridge Inc.

At Enbridge, we safely connect millions of people to the energy they rely on every day, fueling quality of life through our North American natural gas, oil, and renewable power networks and our growing European offshore wind portfolio. We are investing in modern energy delivery infrastructure to sustain access to secure, affordable energy and building on more than a century of operating conventional energy infrastructure and two decades of experience in renewable power. We are advancing new technologies, including hydrogen, renewable natural gas, carbon capture, and storage, and are committed to achieving net zero greenhouse gas emissions by 2050. Headquartered in Calgary, Alberta, Enbridge's common shares trade under the symbol ENB on the Toronto (TSX) and New York (NYSE) stock exchanges.



 
 
 
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