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ArcLight acquires two North Sea pipelines

The Boston-based firm has taken ownership of the two assets, as well as of the St Fergus Gas Terminal, alongside North Sea Midstream Partners.

ArcLight Capital Partners , alongside the management of North Sea Midstream Partners (NSMP), has entered into an agreement with Total Exploration &Production (E&P) UK resulting in the acquisition of a portfolio of assets including the Frigg UK Pipeline (FUKA) and Shetland Island Regional Gas Export System (SIRGES) pipelines as well as the St Fergus Gas Terminal. 

Total E&P UK, a wholly-owned subsidiary of French oil operator Total, has agreed to sell all interests in the portfolio to NSMP for £585 million (€799.64 million; $897.63 million), subject to customary approvals. 

“The sale of these midstream transportation assets is another example of Total's strategy of active portfolio management and the strong potential to unlock value from a range of infrastructure assets,” said Patrick de La Chevardiere, Total's chief financial officer. “Transferring ownership to an entity specialising in midstream UK assets creates value for us and ensures a long and bright future for the facilities.” 

The FUKA pipeline is a 362-kilometre, 32-inch gas pipeline with capacity of 1.27 billion standard cubic feet per day (Bcf/d) of gas. It was originally constructed in 1977 to connect the Frigg Field on the UK-Norway median line to the St Fergus Gas Terminal in Scotland. The Frigg Field is now decommissioned, but the pipeline remains operational and delivers gas from roughly 20 fields in the northern North Sea to St Fergus. 

The SIRGES pipeline is a 234-kilometre, 30-inch pipeline set to enter operations later this year with an anticipated capacity of 665 million standard cubic feet of gas per day (Mmscf/d). It connects the Shetland Gas Plant to the FUKA pipeline. 

The St Fergus Gas Terminal is a three-train processing plant with capacity for up to 2,648Mmscf/d. It currently serves more than 20 gas fields owned and operated by supermajor and national oil company producers including Total. 

Total currently holds a 100 percent operated interest in the FUKA pipeline and the St Fergus Gas Terminal as well as a 67 percent operated interest in the SIRGES pipeline alongside DONG E&P UK (18.3 percent), OMV UK (7.5 percent), and Chevron Star North Sea (7.2 percent). 

Following the completion of the sale, NSMP will have an agreement with px Group – a firm that specialises in operations & maintenance, engineering consultancy, and energy trading – for certain operations and maintenance services to the assets. 

In addition to this new portfolio of assets, NSMP will continue to own and operate the Teesside Gas Processing Plant (TGPP), a facility with a capacity of approximately 675 Mmscf/d located in Teesside, England, which delivers gas via the CATS pipeline in the central North Sea and the Breagh Pipeline from the southern North Sea. 

Since its establishment in 2001, ArcLight has invested more than $12.8 billion across multiple energy cycles in more than 90 power, midstream and production assets. ArcLight affiliates founded NSMP in 2012 alongside former Venture Production CEO Make Wagstaff and the senior management of TGPP to invest in the midstream sector of the North Sea's oil and gas industry. 

Total has been present in the UK since 1962, and is one of the country's top oil and gas operators, with equity production of 89,000 barrels of oil equivalent per day in 2014.