Natural gas expansion fuels $21B pipeline deal
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A $21 billion deal reached Sunday between two Texas-based energy companies could boost efforts already under way to transport natural gas from the Marcellus Shale region to the Gulf Coast.
Kinder Morgan, an energy transportation and storage company, plans to buy El Paso Corp., which owns and operates the largest national gas pipeline network in the United States. Both companies have headquarters in Houston.
The purchase will more than double the size of Kinder Morgan's pipeline network, resulting in a combined network that will stretch 80,000 miles.
Kinder Morgan's pipelines in the Rocky Mountains, the Midwest and Texas will merge with El Paso's network that spreads from the Gulf Coast to New England, as well as to the west through New Mexico, Arizona, Nevada and California.
The pipeline system connects to many important natural gas shale plays, including the Marcellus Shale, which lies beneath much of Pennsylvania, and the Utica Shale in New York and Ohio.
"Major acquisitions like this underscore the critical and expanding role America's abundant natural gas reserves, particularly right here from the Marcellus and Utica shale formations, will continue to play in fueling our nation for decades to come," said Kathryn Klaber, president of the Marcellus Shale Coalition, an industry trade group.
Kinder Morgan and El Paso Corp. are not members of the coalition, but El Paso has been pursuing opportunities to transport natural gas from the Marcellus Shale region to the Gulf Coast.
The agreement between the two Texas energy companies comes about a year after El Paso Midstream Group Inc., a subsidiary of El Paso Corp., announced an agreement with Spectra Energy Corp. of Houston, Texas, to develop a 1,100-mile Marcellus Ethane Pipeline System project.
The system could transport up to 90,000 barrels per day of ethane from plants in the Marcellus Shale region to pipelines and facilities in the Gulf Coast area.
The El Paso project, which will connect pipelines between Houston, Pa., and Natrium, W.Va., to facilities in Louisiana and Texas, is targeted for completion in late 2014.
In a statement released Sunday to announce his company's plan to purchase El Paso, Kinder Morgan chairman and CEO Richard D. Kinder said his company believes natural gas will play an "increasingly integral role in North America."
"We are delighted to be able to significantly expand our natural gas transportation footprint at a time when it seems likely that domestic natural gas supply and demand will grow at attractive rates for years to come," he said.
First Published October 17, 2011 12:00 am
