El Paso to buy gas assets from Kinder Morgan for $2 billion

El Paso Pipeline Partners LP, a Kinder Morgan Inc. subsidiary, has agreed to acquire 50% interest in Ruby Pipeline, 50% interest in Gulf LNG, and 47.5% interest in Young Gas Storage from Kinder Morgan for $2 billion, effective Apr. 30.

The transaction, expected to close in May, includes $1.012 billion of proportionate debt at Ruby and Gulf LNG, resulting in an equity purchase price of $972 million.

The 680-mile, 42-in. Ruby system extends from Wyoming to Oregon, providing gas supplies from the major Rocky Mountain basins to California, Nevada, and the Pacific Northwest.

The Gulf LNG terminal in Pascagoula, Miss., contains 6.6 bcfd of storage capacity and 1.5 bcfd of peak vaporization send-out capacity. It’s in the process of developing the proposed Gulf LNG Liquefaction Project, which will add liquefaction and export capabilities at the existing terminal.

Young Gas Storage is in Morgan County, Colo., and has a working gas storage capacity of 6 bcf.

“As mentioned on our first quarter earnings call, a recent study (Wood Mackenzie) calls for US natural gas demand to increase by over 30% in the next 10 years to approximately 94.5 bcfd,” said Richard D. Kinder, El Paso chairman and chief executive officer.

El Paso, acquired by Kinder Morgan in 2011, owns an interest in or operates 13,000 miles of interstate natural gas transportation pipelines in the Rockies and the Southeast, natural gas storage facilities with a capacity of nearly 100 bcf, and LNG assets in Georgia (OGJ Online, Oct. 17, 2011).

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