Fundraising

Riverstone backs Kinder Morgan’s Utopia pipeline

The private equity firm has acquired a 50% stake in the $500m project, which will serve as a critical outlet for Utica petrochemical companies in Ontario, Canada.

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Riverstone Investment Group has partnered with Kinder Morgan, acquiring a 50 percent equity stake in the new Utopia pipeline that will transport ethane and ethane-propane mixtures from the Utica basin in Ohio to Canada.

The New York-based private equity firm did not disclose the amount of the investment. However, in a statement issued on Tuesday, Riverstone said it had agreed to make an upfront cash payment to Kinder Morgan that will include the reimbursement of 50 percent of Kinder Morgan’s prior capital expenditures related to the project. It has also agreed to an additional payment “to recognise the value created by KMI in developing the project to this stage”.

“We are securing easements and progressing permit applications,” a spokesperson for Kinder Morgan said in an e-mailed response, adding that full-in service is expected in January 2018.

In addition to acquiring 50 percent of existing assets, Riverstone has also committed to funding its share of future capital expenditures necessary to complete construction and commissioning of the pipeline, which is estimated to cost about $500 million.

“The Utopia pipeline will connect growing ethane supply sources in Ohio to the expanding petrochemical market in Sarnia,” said Don Lindley, president of KMI’s natural gas liquids, products pipelines.” According to the statement, the project is supported by a long-term contract with Nova Chemicals Corporation.

The 215-mile, 12-inch diameter pipeline will run from Ohio’s Harrison County to Fulton County and will connect with an existing Kinder Morgan pipeline and associated facilities. The ethane and ethane-propane mixtures transported will be used in the production of plastics.

Kinder Morgan, the largest energy infrastructure company in North America, owns an interest in or operates approximately 84,000 miles of pipelines and about 180 terminals. Its relationship with Riverstone dates back to 2007, when the private equity shop, along with a number of other firms, took Kinder Morgan private. Riverstone has since exited the investment.