MIDSTREAM NEWS

MIDSTREAM SPACE COULD SEE $153B INVESTMENT BEFORE 2017

Speaking on the impact of recent market volatility for the broad energy sector, Tortoise Capital Advisors noted that in the midstream space, production growth continued to outpace pipeline takeaway capacity. The firm projects an estimated $153B in capital investment in MLP, pipeline and related organic growth projects from 2015 through 2017, noting that investments to enable pipelines to reverse direction are increasing. Reflecting on 1Q15 activity in the midstream space, Tortoise noted strong M&A activity, with approximately $30B in MLP and pipeline transactions. The capital markets were supportive of MLP and pipeline companies during the quarter, said the firm, noting the $8.6B in equity, and $17.1B in debt issued to the space during the quarter.

EIV CAPITAL FORMS WOODLAND MIDSTREAM

EIV Capital, a Houston-based private equity firm specializing in the energy industry, completed its $40 million investment to form Woodland Midstream LLC, an independent natural gas midstream company. The investment will fund the build-out and acquisition of natural gas pipeline and processing infrastructure throughout the eastern region of Texas and bordering states. Woodland, based in The Woodlands, TX, is led by Richard Wright and Curtis Stevens. Prior to founding Woodland, Wright and Stevens worked together for over ten years at Azure Midstream and its predecessors; holding various roles including overall responsibility and leadership for business development and gas supply initiatives and the development and optimization of gathering, compression, treating and processing operations, respectively. Founded in 2009, EIV Capital manages multiple funds and is currently investing out of its most recent fund, EIV Capital Fund II LP, consisting of approximately $270 million of commitments, which closed in December 2014.

HI-CRUSH, ARB TO DEVELOP ENERGY RAIL HUBS IN PERMIAN, DJ BASINS

Hi-Crush Partners LP and ARB Midstream LLC have entered into definitive agreements to jointly develop and operate two energy rail hubs, one in the Denver-Julesburg (DJ) Basin and one in the Permian Basin.

Both facilities will be served by the Union Pacific Railroad, and will provide unit and manifest train capabilities for proppant (frac sand) and crude oil. Hi-Crush will operate the frac sand terminals at these facilities, with the frac sand sourced from its production facilities in Wisconsin, and ARB will operate the crude-by-rail terminals.

Hi-Crush and ARB are jointly developing Nicon, a 225-acre site in Weld County, Colorado, in the heart of the DJ Basin. The frac sand infrastructure will include silo storage capacity, allowing Hi-Crush to accommodate unit trains. The crude oil infrastructure will accommodate multiple grades of crude oil and have initial storage capacity of 200,000 barrels, expandable to over 400,000 barrels. Rail-loading capacity will be approximately 79,000 barrels per day of crude oil, with initial truck unload capacity of 35,000 barrels per day. The companies expect the Nicon facility to be commercially operational in 4Q2015.

The Permian Gateway energy rail hub is proposed on 300 acres in Howard County near Big Spring, Texas. ARB has entered into a definitive agreement to purchase the acreage with the closing expected to occur in May. The frac sand infrastructure will include silo storage capacity, allowing Hi-Crush to accommodate unit trains. Hi-Crush and ARB expect the Permian Gateway energy rail hub to be commercially operational by early 2016.

ANADARKO SELECTS CBI-LED GROUP FOR INITIAL ONSHORE MOZAMBIQUE LNG DEVELOPMENT

A consortium consisting of CB&I, Chiyoda Corp. and Saipem (CCS JV) has been selected by Anadarko Petroleum Corp. on behalf of the co-venturers in Mozambique's Offshore Area 1, for the initial development of the onshore LNG park in Mozambique.

"Selecting CCS JV for the development of the onshore Mozambique LNG park is a significant step toward reaching FID (Final Investment Decision) and demonstrates our continued commitment to advancing this important project toward first cargoes," said Anadarko chairman, president, and CEO, Al Walker.

Previously, the co-venturers have secured non-binding off-take agreements (over eight MMPTA, Walker noted) and LOIs for project financing. In 2013, Anadarko announced its plan monetize a portion of its working interest, and, while there has been market speculation about whether or not Anadarko will divest the Mozambique project, "keeping the project moving is critical to preserving value in the develop or divest decision," said Global Hunter Securities analysts following the news.

The scope of the work for the onshore LNG park includes two LNG trains, each with capacity of six MMTPA, which is an increase of 1 MMTPA per train over the original plan, while maintaining an estimated cost that is consistent with the co-venturers' original projections. The scope also includes two LNG storage tanks, each with capacity of 180,000 cubic meters, condensate storage, multi-berth marine jetty and associated utilities and infrastructure.

The selection of CCS JV is subject to negotiation and entry into a definitive agreement prior to taking FID.

Anadarko operates the Offshore Area 1 with a 26.5% working interest. Co-venturers include Empresa Nacional de Hidrocarbonetos EP (ENH) (15%), Mitsui E&P Mozambique Area1 Ltd. (20%), ONGC Videsh Ltd. (16%), Bharat PetroResources Ltd. (10%), PTT Exploration & Production Plc (8.5%), and Oil India Ltd. (4%).

CHENIERE BEGINS CONSTRUCTION ON CORPUS CHRISTI LIQUEFACTION TRAINS

Cheniere Energy Inc.'s board of directors has made a positive final investment decision (FID) with respect to its liquefaction project near Corpus Christi, Texas (the CCL Project) and has issued a notice to proceed (NTP) to Bechtel Oil, Gas and Chemicals Inc. to construct the first two natural gas liquefaction trains.

The CCL Project is designed for up to three trains with expected aggregate nominal production capacity of approximately 13.5 million tonnes per annum (mtpa), three LNG storage tanks with capacity of approximately 10.1 bcfe, two LNG carrier docks, and a 22-mile, 48-in. natural gas supply pipeline. The first train is expected to start operations as early as 2018, with the second train expected to begin operations approximately six to nine months thereafter.

Total project costs of $11.5 billion for the first two trains, two LNG storage tanks, one dock, and the natural gas supply pipeline will be funded with $3.1 billion of project equity and $8.4 billion of debt. Corpus Christi Holdings LLC, a wholly owned subsidiary of Cheniere, has closed on its previously announced credit facility (CCL credit facility) for the first two trains totaling $8.4 billion.

Subsequent to the close of the CCL credit facility, Cheniere CCH HoldCo II LLC, a wholly owned subsidiary of Cheniere, has closed on $1 billion of the previously announced $1.5 billion aggregate principal amount of 11% senior secured notes due 2025 with EIG Management Co. LLC. The convertible notes, together with the CCL credit facility and an equity contribution of $500 million from Cheniere, complete the financing required to begin developing, constructing, and placing into service the first two trains.

SHELL MIDSTREAM PARTNERS TO ACQUIRE ADDITIONAL INTERESTS IN ZYDECO, COLONIAL

Shell Midstream Partners LP has executed a purchase and sale agreement to acquire additional interests in Zydeco Pipeline Co. LLC and Colonial Pipeline Co. from Shell Pipeline Co. LP, a wholly owned subsidiary of Royal Dutch Shell plc, for $448 million. This represents the Partnership's first acquisition since its initial public offering in November 2014. The acquisition will increase Shell Midstream Partners' ownership interest in Zydeco to 62.5% from 43.0% and in Colonial to 3.0% from 1.612%. The acquisition will be funded through a combination of proceeds from a private placement of new common units, borrowings under the revolving credit facility, and cash on hand. The terms of the acquisition were approved by the conflicts committee of the board of directors of the general partner of Shell Midstream Partners, which is composed entirely of independent directors. This committee was advised by Evercore Group LLC as to financial matters and by Andrews Kurth LLP as to legal matters.

SUNOCO LOGISTICS TO PARTICIPATE IN BAKKEN PIPELINE PROJECT

Sunoco Logistics Partners LP has reached agreement with ETP to participate in the Bakken Pipeline project, which is jointly owned by ETP and Phillips 66.

The project consists of existing and newly constructed pipelines that are expected to provide aggregate takeaway capacity of approximately 470,000 b/d of crude oil from the Bakken/Three Forks production area in North Dakota to key refinery and terminalling hubs in the Midwest and Gulf Coast including the Partnership's Nederland terminal.

The ultimate takeaway capacity target for the project is 570,000 b/d. The pipeline system is supported by long-term fee based contracts and is expected to begin commercial operations in 4Q16. The partnership will fund its proportionate share of the construction costs and is expected to have a 30% interest in the project. The partnership also anticipates reaching agreement with ETP to become the operator of the pipeline system.