Enbridge is purchasing Tres Palacios, a gas storage facility in Texas, for $335 million. (Source: Shutterstock)
Enbridge is acquiring a natural gas storage facility in a deal with Crestwood Equity Partners LP and Brookfield Infrastructure Partners.
The Calgary-based midstream company is purchasing the Tres Palacios gas storage facility in Matagorda County, Texas, for $335 million, Enbridge announced on March 1.
Tres Palacios is a salt cavern natural gas storage facility located in Markham, Texas, with a working gas capacity of around 35 Bcf across three storage caverns. A fourth storage cavern working its way through Federal Energy Regulatory Commission permitting would add another 6.5 Bcf of capacity.
The facility has a maximum injection rate of 1 Bcf/d and a maximum withdrawal rate of 2.5 Bcf/d, according to regulatory filings.
Tres Palacios also owns a 62-mile gas header pipeline system that interconnects with 11 major gas pipeline connections, including with Enbridge’s Texas Eastern Pipeline.
Crestwood announced plans to sell its interests in Tres Palacios during the company’s earnings report on Feb. 21. The transaction is expected to close during the second quarter.
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Picking up non-core assets
Crestwood Equity Partners owns a 50.1% equity interest in the Tres Palacios joint venture, while Brookfield owns the remaining 49.9% interest. Crestwood stands to receive approximately $168 million for its interest in Tres Palacios, which the company plans to use to pay down debt.
Crestwood has worked to streamline its portfolio by expanding its footprint in oil-weighted regions like the Williston, Delaware and Power River basins, Crestwood Chairman and CEO Robert Phillips said in the company’s fourth-quarter earnings report.
Part of the firm’s strategy has been divesting away non-core and gas-weighted assets in the Barnett and Marcellus shales.
Since last summer, Enbridge has taken advantage of other companies divesting non-core midstream assets. In January, Enbridge acquired Diamondback Energy Inc.’s 10% equity interest in the Gray Oak Pipeline, which connects Permian Basin and Eagle Ford Shale crude oil to destinations on the Texas Gulf Coast.
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In August 2022, Enbridge boosted its stake in Gray Oak from 22.8% to 58.5% as a result of a joint venture merger transaction with Phillips 66. The additional 10% interest from Diamondback grew Enbridge’s stake in Gray Oak to 68.5%.
Enbridge will assume operatorship of the pipeline during second–quarter 2023.
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