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Summit Midstream closes $207m deal for ETC Canyon Pipeline

24 Oct 2012

Summit Midstream Partners, a provider of natural gas gathering and compression services backed by energy infrastructure-focused buyout firm Energy Capital Partners and GE Energy Financial Services, has closed the acquisition of ETC Canyon Pipeline.

The company, which was bought for $207m from Energy Transfer Partners subsidiary La Grange Acquisition, gathers and processes natural gas in the Piceance and Uinta Basins in Colorado and Utah.

Gas is processed primarily under long-term, fee-based agreements with more than 50 customers including WPX Energy, Noble, Black Hills, Laramie, Encana, ExxonMobil, and Antero.

The gas gathering and processing system consists of more than 1,600 miles of pipe, 44,000 horsepower of compression, processing assets with a total capacity of 97 MMcf/d, and two NGL injection stations.

The Canyon assets will be held in Red Rock Gathering Company, a subsidiary of Summit Investments, which also owns a gathering system in the Sand Wash Basin in northern Colorado that was acquired in the second quarter of 2012.

“Red Rock solidifies our position in the Rockies as a premier midstream operator and should allow the company to capture new business opportunities in the region,” said Steve Newby, president and CEO of Summit Investments.

“We are particularly excited that this acquisition provides the company with increased exposure to the liquid-rich parts of the Mancos and Niobrara Shale formations in the Piceance Basin, where Canyon and Summit Midstream Partners, LP, through its ownership of the Grand River natural gas gathering system, operate.

“Red Rock also provides Summit Investments with additional opportunities to capitalise on growth projects supporting traditional Mesaverde formation production and new production in the Uinta and Sand Wash Basins.”

Summit Investments also announced that Red Rock has two new fee-based commercial agreements with WPX Energy Rocky Mountain and Black Hills Exploration and Production.

Each of these new agreements include long-term acreage dedications and collectively provide more than 350 Bcf of minimum volume commitments.

Red Rock will expand its existing gathering and compression services for WPX by constructing gas gathering infrastructure to connect new WPX production in the Rifle, Colorado area.

Red Rock will also construct a processing plant and related gas gathering infrastructure in the DeBeque, Colorado area, which will support Black Hills’ future development of their liquids-rich Mancos and Niobrara acreage.

The WPX project will be developed and commissioned over the next several years and the Black Hills project is expected to be completed by the end of 2013.

Newby added, “These new organic growth projects at Red Rock enable us to leverage our asset development skill set and drive contracted, fee-based cash flow growth over the next several years.”

Energy Capital Partners set up Summit Midstream Partners in September 2009 as a platform to acquire and develop a portfolio of North American midstream energy infrastructure assets.

The platform debuted on the Nasdaq stock exchange last month.

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