MIC expands Bayonne Energy Centre

The transaction includes acquiring the land beneath the power generating facility, building a natural gas pipeline and increasing BEC’s generating capacity.

Less than a year after buying the Bayonne Energy Centre (BEC) from ArcLight Capital Partners for $720 million, Macquarie Infrastructure Corporation (MIC) has completed the acquisition of the land beneath BEC, the first step in its expansion plan for the power-generating facility.

According to a statement, the purchase also included buying out the remainder of the 55-year lease from Hess Corporation, which Macquarie Infrastructure assumed when it acquired the facility last April.

“The land acquisition provides MIC with additional security associated with having a perpetual interest in the property beneath the plant as well as the financial benefit of avoided lease payments,” MIC said in the statement.

The acquisition will also benefit International-Matex Tank Terminals (IMTT), MIC’s marine terminals business located next to the power facility, by allowing IMTT to expand its docks.

The proximity of BEC and IMTT, which Macquarie highlighted as an advantage when announcing its decision to acquire the power generating facility, has also resulted in MIC’s decision to build a 7,000-foot long pipeline that will interconnect with the Spectra Energy-owned Texas Eastern Transmission LP (TETLP) natural gas pipeline. The existing TETLP pipeline runs beneath property owned by IMTT. The new interconnector will provide BEC with additional access to affordable natural gas and facilitate the development of gas-using businesses, MIC said.

The final component of BEC’s expansion is MIC’s plan to increase the facility’s power-generating capacity to at least 642 megawatts (MW) from 512MW currently. MIC will install two additional generating sets (turbine plus generator) on vacant land owned by IMTT and adjacent to BEC.

“With the purchased land, gas pipeline development and contract for generating sets in place, the expansion of BEC is now contingent only upon receipt of required regulatory approvals,” MIC said.

Another MIC business, Hawaii Gas, the only regulated gas processing and pipeline distribution network on the islands of Hawaii, also signed an agreement to acquire land beneath its synthetic natural gas plant at Campbell Industrial Park on Oahu from BHP.

“As with BEC, by owning the land beneath its plant, Hawaii Gas has achieved both additional security with regard to existing operations and avoided potential future lease rate increases,” MIC said.

The New York-based investment firm, which is a wholly owned subsidiary of Australia’s Macquarie Group, did not disclose the exact figure for the BEC expansion and Hawaii Gas land purchase but announced both as part of $115 million worth of growth investments. Of the total, approximately $50 million was deployed for the expansion of MIC’s Atlantic Aviation business, the owner of one of the US’ largest networks of fixed-base operations (FBO) serving the general aviation industry.

Atlantic Aviation’s investments include the acquisition of an FBO at McClellan-Palomar airport in Carlsbad, California; the acquisition of an FBO at El Paso International Airport in El Paso, Texas from Cutter Aviation; the acquisition of a hangar in Hayden, Colorado; the construction of a new hangar at Rifle, Colorado; and an agreement to acquire a hangar at Boeing Field in Seattle, Washington.

Macquarie declined to comment on the individual investments made in BEC and Hawaii Gas.