AIMCo, GIC back oil and gas infra tie-up

Institutional capital has backed a joint venture launched by two US firms planning to build oil and natural gas infrastructure assets in the Delaware Basin.

Alberta Investment Management Company (AIMCo), Singapore’s sovereign wealth fund GIC and Alinda Capital Partners committed a combined $563 million to help start a partnership between Texas-based Howard Midstream Energy Partners (HEP) and WPX Energy, headquartered in Oklahoma. The two energy firms have agreed to develop oil and natural gas process infrastructure in fields owned by WPX Energy in the basin, which stretches from western Texas and southern New Mexico.

HEP said it will construct and operate a 50-mile crude oil gathering system, a natural gas processing facility and associated pipelines. HEP will use the institution’s commitment to pay WPX $300 million up front and fund the first $263 million of the partnership’s expenses.

“This joint venture not only diversifies HEP’s footprint into the most prolific basin in the nation, but it demonstrates our team’s ability to differentiate ourselves among our competitors and to raise significant capital for large-scale infrastructure projects,” HEP chief executive Mike Howard said.

Alinda is one week removed from exiting the Houston Fuel Oil Terminal Company, a 16.8 million-barrel terminal it sold to Tulsa-based SemGroup for $2.1 billion. The firm currently manages $10 billion in assets and operates in the US, Canada and Europe.

AIMCo and GIC’s participation in the deal is a break from their recent investments in renewable energy companies. AIMCo partnered with AES Corporation in February to pay $853 million for the purchase of the US’s largest utility-scale solar operator sPower. In March, GIC invested $123.9 million in Indian renewable energy developer Greenko Energy.