Kinder Morgan sells 49% stake in Elba Liquefaction to EIG Global Energy Partners Investment Funds
Investment funds managed by EIG Global Energy Partners (EIG) have become a 49 percent joint venture participant in Elba Liquefaction Company, L.L.C. (ELC) which will own 10 liquefaction units and other ancillary equipment to be constructed as part of the Elba Liquefaction Project at Kinder Morgan’s existing Southern LNG Company, L.L.C. Elba Island LNG facility near Savannah, Georgia, Kinder Morgan said Tuesday in a media release.
To acquire its membership interest, EIG has made an upfront cash payment of approximately $385 million, consisting of reimbursement to KMI for EIG’s 49 percent share of prior ELC capital expenditures, excluding capitalized interest, and a payment of approximately $170 million in excess of capital expenditures in consideration of the value created by KMI in developing the project to this stage.
EIG has agreed to fund its share of future capital expenditures necessary to complete construction and commissioning of the liquefaction facility, subject to the terms and conditions contained in the applicable agreements. The total project cost is estimated to be approximately $1.3 billion, excluding capitalized interest.
“We are excited that EIG will become an equity owner in Elba Liquefaction Company as construction continues at Elba Island. The project, which began construction on Nov. 1, 2016, is supported by a 20-year contract with Shell,” said Steve Kean, Kinder Morgan president and chief executive officer.
“As we have told the market in past months, this JV is another strategic step towards achieving our stated goals of strengthening our balance sheet and positioning the company for long-term value creation,” Kean said.
“This is a tremendous project that builds on our long-standing and extensive experience in LNG and LNG-related infrastructure,” said Wallace Henderson, Managing Director of EIG. “We are delighted to partner with Kinder Morgan and its outstanding development team to make the Elba Liquefaction Project a reality.”
Initial liquefaction units are currently expected to be placed in service in mid-2018, with final units coming on line by early 2019. In 2012, the Elba Liquefaction Project received authorization from the Department of Energy (DOE) to export to Free Trade Agreement (FTA) countries, and on Dec. 16, 2016, the DOE issued non-FTA export authority. The project is expected to have a total capacity of approximately 2.5 million tonnes per year of LNG for export, equivalent to approximately 350 million cubic feet per day of natural gas.
Barclays acted as the exclusive financial advisor to KMI during this transaction.
About Kinder Morgan, Inc.
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy infrastructure companies in North America. It owns an interest in or operates approximately 84,000 miles of pipelines and 155 terminals. The company’s pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals, and handle bulk materials like coal and petroleum coke.
About EIG
EIG specializes in private investments in energy and energy-related infrastructure on a global basis and had US$14.4 billion under management as of December 31, 2016. Since 1982, EIG has been one of the leading providers of institutional capital to the global energy industry, providing financing solutions across the balance sheet for companies and projects in the oil and gas, midstream, infrastructure, power and renewables sectors globally. EIG has invested US$23.1 billion in more than 310 portfolio investments in 36 countries. EIG is headquartered in Washington, D.C., with offices in Houston, London, Sydney, Rio de Janeiro, Hong Kong and Seoul.
