El Paso, KKR form midstream joint venture
El Paso Midstream Group Inc., a subsidiary of El Paso Corp., and Kohlberg Kravis Roberts & Co. have created a midstream joint venture covering producing areas from Utah to Pennsylvania to Texas.
Christopher E. Smith
OGJ Pipeline Editor
HOUSTON, Dec. 7 -- El Paso Midstream Group Inc., a subsidiary of El Paso Corp., and Kohlberg Kravis Roberts & Co. have created a midstream joint venture covering producing areas from Utah to Pennsylvania to Texas. El Paso Midstream will operate the venture, with each company owning 50%.
KKR will acquire a 50% interest in El Paso's Altamont gathering and processing assets in the Northern Uinta basin, Utah, for $125 million. These assets include about 800 miles of pipelines, 3,800 b/d of fractionation capacity, and 40 MMcfd natural gas processing capacity, serving both El Paso Exploration & Production Co. and third-party producers. El Paso expects to increase its drilling activity at Altamont from a current two-rig program to three rigs in 2011 and six rigs by 2013.
KKR and El Paso will also each invest up to roughly $500 million in future midstream projects including, but not limited to, the Marcellus Ethane Pipeline System in the Marcellus shale and the Camino Real Pipeline in the Eagle Ford shale in South Texas. El Paso is partnering with Spectra Energy to develop MEPS, and is seeking a partner for Camino Real.
KKR and Houston independent Hilcorp Energy Co. agreed in June to form a partnership to develop Hilcorp's 100,000-net acre Eagle Ford holding (OGJ, June 28, 2010, p. 8).
Contact Christopher E. Smith at email@example.com.