UGI pays $ 190 million for Stonehenge gas pipeline in Pennsylvania

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Valley Forge’s energy company UGI Corp. is expanding its pipeline network in the Marcellus Shale area of ​​Pennsylvania.

UGI Energy Services, LLC said Tuesday it will pay $ 190 million to acquire Stonehenge Appalachia, a 47-mile pipeline in Butler County that transports natural gas produced from local wells to interstate pipelines.

The acquisition is UGI’s third transaction in recent years that has expanded its presence in the shale gas region northeast of Pittsburgh. The largest transaction was the $ 1.3 billion acquisition in 2019 of Columbia Midstream Group LLC, a 240-mile system in Butler, Armstrong and Indiana counties that includes the Big Pine Pipeline. Last year, UGI also purchased a 49% stake in the Pine Run Midstream system, which, like the Stonehedge pipeline, is interconnected with the larger Big Pine system.

Together, the three pipelines form what is known as an “intermediate system,” which connects gathering pipelines connected at individual wells to large interstate pipelines, which supply fuel to large remote customers, including power plants and local utilities.

“When we acquired the assets of Columbia Midstream Group in 2019, we made a commitment to invest more to build or purchase quality systems in the region,” said Robert F. Beard, executive vice president of natural gas, of Global Engineering, Construction and Supply of UGI. in a report. He said the Stonehenge acquisition “demonstrates our commitment to the Appalachian Basin,” which produced record volumes of natural gas in the first half of 2021.

Intermediate pipeline systems, which have long-term customers under contract and operate largely out of the public eye, are stable cash flow generators for companies like UGI.

“This investment is in line with our strategy of generating reliable earnings growth while continuing to rebalance our business activities with growing investments in natural gas and renewable energy,” said Roger Perreault, President and CEO of UGI , in a press release. UGI also owns several gas and electric utilities and distributes propane through its subsidiary AmeriGas.

Its subsidiary UGI Energy Services operates around ten gas pipelines in Pennsylvania, Ohio and West Virginia, as well as several liquefied natural gas production plants, gas-fired power plants, a gas storage facility and 21 solar parks. He was also the operator and 20% owner of the failed billion dollar PennEast Pipeline project, which was scuttled last year after public opposition and New Jersey regulators blocked its construction until ‘at its terminus near Trenton.

Despite pressure on policymakers to move away from fossil fuel production to reduce greenhouse gas emissions, operators in Pennsylvania have continued to produce stupendous amounts of natural gas from shale formations ever since. the development of hydraulic fracturing technology, or hydraulic fracturing.

Pennsylvania produces about a fifth of the country’s natural gas and is the second largest gas producer behind Texas. Its wells produced a record 7.1 trillion cubic feet of natural gas in 2020 and were on track to set a new record last year, according to production reports released through October by US Energy Information. Administration.

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