Sempra Energy Sells Non-Utility Gas Storage Assets
Sempra Energy said January 2 a subsidiary has agreed to sell its non-utility natural gas storage facilities in the US for $332mn to an affiliate of ArcLight Capital Partners. The transaction is expected to close in 1Q 2019.
Included in the sale are Sempra LNG & Midstream’s Mississippi Hub storage facility in Simpson County, Mississippi, with a working capacity of 22.3bn ft3; and its Bay Gas storage facility in southwest Alabama, consisting of five underground caverns with a working capacity of 20.4bn ft3. Both facilities will become part of the Enstor natural gas storage platform, which ArcLight acquired in 2018.
“Our agreement to sell our non-utility US natural gas storage assets is an important component to achieving our portfolio-optimization goals we announced in June 2018,” Sempra Energy COO Joseph Householder said. “Completing this sale, along with the recently announced sale of our non-utility US solar assets, enables us to reallocate capital to further strengthen our balance sheet and support Sempra Energy’s future growth opportunities.”
While still considered important for gas utilities, natural gas storage is becoming less important in the North American gas marketing industry, as the proliferation of shale gas wells has turned natural gas into more of a “just in time” commodity.
Storage volumes in both Canada and the US have fallen below five-year averages, a situation which prior to the shale gas revolution would have sent natural gas prices sharply higher.
But this year, with storage in the Lower 48 US at some 2,725bn ft3 as of mid-December, well below the five-year average of 3,372bn ft3, natural gas futures prices have moved only slightly. Through the last two weeks of December, the Nymex contract hovered around the US$3.50/mn Btu mark, but on January 2 it fell to $2.94/mn Btu, according to data from the US Energy Information Administration.