EQT Infra heads to US for latest natural gas deal

The Swedish investor has taken a majority stake in Peregrine, a US natural gas storage company, in a transaction that will allow Peregrine to fund the completion of its first storage facility. Around a week ago, EQT struck a major natural gas transmission deal in its home market.

EQT Infrastructure, the infrastructure investment arm of Swedish private equity firm EQT, has acquired a 70 percent stake in Peregrine Midstream Partners, a US-based natural gas storage company, from the firm’s management team and other investors. The amount paid was undisclosed. 

The investment will allow Peregrine Midstream, which is based in Houston, Texas, to fund the completion of Ryckman Creek, the firm’s first natural gas storage facility. 

Located in Wyoming, the Ryckman Creek reservoir previously produced oil and gas for Amoco Production Company from 1976 to 1993. On July 28 2011, the Federal Energy Regulatory Commission granted approval for it to be converted into a gas storage facility. Ryckman Creek will begin storage operations next year, offering gas storage services to markets in the Western and Midwestern US. 

According to a press release announcing the deal, Ryckman Creek will initially offer 18 billion cubic feet of working gas capacity, all of which is under contract, rising to 35 billion at full capacity. The facility will utilise interconnections with four pipelines: Kern River, Questar, Overthrust and Northwest. An interconnection with the Ruby Pipeline is planned for 2013. 

“Natural gas has continued to develop strong momentum as a key form of energy supply in the United States,” said John Hopper, chief executive of Peregrine Midstream, in the press release. “Peregrine Midstream is well positioned to take advantage of this momentum by providing critical storage infrastructure and services to the natural gas market.”

Peregrine Midstream was co-founded in 2009 by Hopper and chief commercial officer Jeff Fouch, the two men having previously co-founded Falcon Gas Storage Company, also a natural gas storage company. Other former members of the Falcon management team are now part of the senior management team at Peregrine. 

For EQT Infrastructure, the deal represents its second in the natural gas sector in the space of a week. On July 27, EQT subsidiary Swedgas acquired a high-pressure gas grid in Sweden – E.ON Gas Sverige – from utility E.ON, making it the sole owner of Sweden’s entire high-pressure natural gas transmission network. The deal added 230 kilometres of gas pipelines to the 390 kilometres it already owned following its prior acquisition of Swedgas. 

EQT Infrastructure launched in 2008 with €1.2 billion in commitments and is around 70 percent committed.