Kinder Morgan, Inc. (KMI) announced today that investment funds managed by EIG Global Energy Partners (EIG) have become a 49 percent joint venture participant in Elba Liquefaction Company, L.L.C. (ELC) which will own 10 liquefaction units and other ancillary equipment to be constructed as part of the Elba Liquefaction Project at Kinder Morgan’s existing Southern LNG Company, L.L.C. Elba Island LNG facility near Savannah, Georgia. To acquire its membership interest, EIG has made an upfront cash payment of approximately $385 million, consisting of reimbursement to KMI for EIG’s 49 percent share of prior ELC capital expenditures, excluding capitalized interest, and a payment of approximately $170 million in excess of capital expenditures in consideration of the value created by KMI in developing the project to this stage.
EIG has agreed to fund its share of future capital expenditures necessary to complete construction and commissioning of the liquefaction facility, subject to the terms and conditions contained in the applicable agreements. The total project cost is estimated to be approximately $1.3 billion, excluding capitalized interest.
“We are excited that EIG will become an equity owner in Elba Liquefaction Company as construction continues at Elba Island. The project, which began construction on Nov. 1, 2016, is supported by a 20-year contract with Shell,” said Steve Kean, Kinder Morgan president and chief executive officer.
“As we have told the market in past months, this JV is another strategic step towards achieving our stated goals of strengthening our balance sheet and positioning the company for long-term value creation,” Kean said.
“This is a tremendous project that builds on our long-standing and extensive experience in LNG and LNG-related infrastructure,” said Wallace Henderson, Managing Director of EIG. “We are delighted to partner with Kinder Morgan and its outstanding development team to make the Elba Liquefaction Project a reality.”
Initial liquefaction units are currently expected to be placed in service in mid-2018, with final units coming on line by early 2019. In 2012, the Elba Liquefaction Project received authorization from the Department of Energy (DOE) to export to Free Trade Agreement (FTA) countries, and on Dec. 16, 2016, the DOE issued non-FTA export authority. The project is expected to have a total capacity of approximately 2.5 million tonnes per year of LNG for export, equivalent to approximately 350 million cubic feet per day of natural gas.
Barclays acted as the exclusive financial advisor to KMI during this transaction.
About Kinder Morgan, Inc.
Kinder Morgan, Inc. (KMI) is one of the largest energy infrastructure companies in North America. It owns an interest in or operates approximately 84,000 miles of pipelines and 155 terminals. The company’s pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals, and handle bulk materials like coal and petroleum coke. For more information please visit www.kindermorgan.com.
EIG specializes in private investments in energy and energy-related infrastructure on a global basis and had US$14.4 billion under management as of December 31, 2016. Since 1982, EIG has been one of the leading providers of institutional capital to the global energy industry, providing financing solutions across the balance sheet for companies and projects in the oil and gas, midstream, infrastructure, power and renewables sectors globally. EIG has invested US$23.1 billion in more than 310 portfolio investments in 36 countries. EIG is headquartered in Washington, D.C., with offices in Houston, London, Sydney, Rio de Janeiro, Hong Kong and Seoul. For more information, please visit www.eigpartners.com.
Important Information Relating to Forward-Looking Statements
This news release includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act of 1934. Generally the words “expects,” “believes,” anticipates,” “plans,” “will,” “shall,” “estimates,” and similar expressions identify forward-looking statements, which are generally not historical in nature. Forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of Kinder Morgan and EIG management, based on information currently available to them. Although Kinder Morgan and EIG believe that these forward-looking statements are based on reasonable assumptions, the firms can give no assurance that any such forward-looking statements will materialize. Important factors that could cause actual results to differ materially from those expressed in or implied from these forward-looking statements include the risks and uncertainties described in Kinder Morgan’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year-ended December 31, 2015 (under the headings “Risk Factors” and “Information Regarding Forward-Looking Statements” and elsewhere) and its subsequent reports, which are available through the SEC’s EDGAR system at www.sec.gov and on its website at ir.kindermorgan.com. Forward-looking statements speak only as of the date they were made, and except to the extent required by law, Kinder Morgan and EIG undertake no obligation to update any forward-looking statement because of new information, future events or other factors. Because of these risks and uncertainties, readers should not place undue reliance on these forward-looking statements.