El Paso to acquire Kinder Morgan’s natural gas assets for $2bn

El Paso Pipeline Partners (EPB) has agreed to acquire several natural gas assets from Kinder Morgan for approximately $2bn.

The company will acquire Kinder Morgan’s 50% interest in Ruby Pipeline, 50% stake in Gulf LNG and 47.5% interest in Young Gas Storage. The deal includes $1.012bn of proportionate debt at Ruby pipeline and Gulf LNG, resulting in an equity purchase price of $972m.

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

Located in Pascagoula, Mississippi, the Gulf LNG terminal has 6.6 billion cubic feet a day of storage capacity and 1.5 billion cubic feet a day of peak vaporisation send-out capacity. The company is developing the proposed Gulf LNG liquefaction project, which will add liquefaction and export capabilities at the existing terminal.

Situated in Morgan county, Colorado, Young Gas Storage has a working natural gas storage capacity of about 6 billion cubic feet.

Kinder Morgan chairman and CEO Richard Kinder said that market conditions continue to support the view that natural gas is the future play for America’s energy needs.

"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 ten years to approximately 94.5 billion cubic a day," Kinder said.

"EPB, which is comprised entirely of natural gas assets, will be a significant player in helping meet this growing demand and is well positioned for future growth."