Private equity firm Stonepeak Partners has agreed to acquire a 50% stake in the Key Access Pipeline System (KAPS) from a subsidiary of Pembina Gas Infrastructure (PGI) for C$662.5m ($484.8m).
PGI is 60% owned by Canadian pipeline operator Pembina Pipeline while KKR’s global infrastructure funds own the remaining 40% stake.
The KAPS is a natural gas liquids (NGL) dual pipeline system that connects Northwest Alberta to energy hubs in Edmonton and Fort Saskatchewan, in Canada.
Under the deal terms, PGI will continue to fund its share of the project costs, which is estimated to be $1bn until the end of 2023.
Proceeds from the sale will be used by PGI to repay drawn credit facilities associated with the funding of the KAPS construction.
Canada midstream company Keyera will continue to operate the KAPS with a 50% stake.
The 560km pipeline system links Montney and Duvernay production in Western Canada to the fractionation and logistics assets of Keyera in Fort Saskatchewan.
Stonepeak said in a statement: “KAPS provides a competitive transportation alternative that allows producers to grow their natural gas production in advance of additional LNG in-service both in Western Canada and the U.S. Gulf Coast.
“The project strengthens the economic viability of Western Canadian liquefied natural gas (LNG) facilities, whose product reaches Asian markets with approximately 30% reduced shipping emissions relative to US Gulf Coast originated routes.”
Subject to approval by the Commissioner of Competition, as well as the satisfaction of other closing conditions, the transaction is planned for completion in the first quarter of 2023.
The acquisition is expected to provide Stonepeak with access to a pipeline system, which supplies natural gas liquids to processing facilities for export to Asia, reported Reuters.
