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Carlyle Group quits proposed Texas oil export project
TEXAS
PRIVATE equity asset management firm the Carlyle Group confirmed on October 18 that it had dropped out as a participant in Lone Star Ports, which is proposing to build a $1bn crude oil export terminal near Corpus Christi, Texas.
The firm had been partnering with the Berry Group in the Lone Star Ports joint venture, which has unveiled plans to build the first US onshore export terminal designed to handle very large crude carriers (VLCCs), which have a capacity of 2mn barrels of oil.
Carlyle said in a statement that Berry was now the sole owner of Lone Star, but did not specify its reason for quitting the project. Indeed, it added that Berry and Lone Star were intending to con- tinue developing the project, which would be located on Harbor Island, between Port Aransas and Aransas Pass.
However, Reuters reported that Lone Star had filed a lawsuit against Carlyle in a Texas state court in September. The lawsuit alleged that the private equity firm had breached its contract to jointly pursue the project, and Lone Star asked the court to award it full ownership. The lawsuit also sought unspecified damages.
Neither Lone Star nor Berry have publicly commented on the news of Carlyle’s exit from the project.
The Lone Star project was one of at least nine crude export terminals proposed for the US Gulf Coast to accommodate VLCCs. Com- modity trader Trafigura and refiner Phillips 66 are proposing to develop projects in the same area, in competition with Lone Star. Indeed, Trafigura is thought to have a better chance of building its terminal, having launched its project earlier, with an easier path to reg- ulatory approval and less opposition from environmentalists.
Not all of the projects are expected to reach the final investment decision (FID) stage, amid concerns over a glut of crude exports. Nonethe- less, energy consultancy Rystad Energy has fore- cast that US crude exports could nearly double to almost 6mn barrels per day by 2022, from 2.9mn bpd currently.
According to a source familiar with the mat- ter that was cited by Reuters, earlier this year Carlyle had been seeking to sell a 25% stake in the Lone Star project for $625mn.™
DTE buying Haynesville gathering system, pipeline
LOUISIANA
The Haynesville has undergone a recent resurgence despite persistently low natural gas prices.
DTE Midstream, a subsidiary of DTE Energy, announced on October 18 that it had agreed to buy a natural gas-gathering system and pipeline in Louisiana’s Haynesville shale play. DTE’s mid- stream unit currently focuses on the US Midwest and Northeast, but is expanding its presence to the US Gulf Coast. It will acquire M5 Louisiana Holdings from Momentum Midstream and Indigo Natural Resources, which is the main producer that feeds gas into the system.
The assets that are part of the acquisition include an existing gathering system and a 150- mile (241-km) gathering pipeline that is under construction, which will be in service in the second half of 2020. The primary assets gather gas produced in the Haynesville shale play and access multiple major pipelines, including those serving the Gulf Coast, DTE said. The company will pay $2.25bn in cash for the assets, plus a $400mn milestone payment upon completion of the gathering pipeline in the second half of 2020.
The acquisition forms part of DTE Energy’s
plan to invest $4-5bn into its midstream business between 2019 and 2023. The deal is expected to add $0.15 immediately to the company’s operat- ing earnings per share in 2020, it said.
“The assets are located in a great demand area, the quickly growing Gulf Coast natural gas market, with excellent access to other pipeline systems,” DTE Energy’s CEO, Jerry Norcia, told analysts on a call to discuss the acquisition.
The Haynesville has undergone a recent resurgence despite persistently low natural gas prices. It is the third-largest shale gas produc- tion region in the US after Appalachia – which comprises the Marcellus and Utica plays – and the Permian Basin. The region is benefiting from rising demand on the Gulf Coast as new lique- faction capacity comes online.
The US Energy Information Administration (EIA) is predicting that Haynesville production will hit 11.8bn cubic feet (335mn cubic metres) per day in November, up by 110mn cubic feet (3 mcm) per day on the forecast for October.™
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