Crestwood Equity Partners has agreed to sell its interest in Tres Palacios Gas Storage to a joint venture between Crestwood Midstream Partners and an affiliate of Brookfield Infrastructure for $130m.
Crestwood Midstream will hold 50.01% of Tres Palacios Holdings and will operate Tres Palacios and its assets.
The transaction is anticipated to be completed in early December 2014.
The Federal Energy Regulatory Commission (FERC) regulates the Tres Palacios multi-cycle natural gas storage facility, which is capable of storing about 38.4 billion cubic feet (Bcf) of natural gas.
It provides over 1 Bcf per day of injection and has withdrawal capability.
The facility has an about 60-mile bidirectional pipeline system with ten pipeline interconnects and related facilities.
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By GlobalDataThe Tres Palacios assets are situated in Matagorda, Wharton, and Colorado counties, Texas.
Brookfield Infrastructure’s North American energy platform includes around 15,500km of natural gas transmission pipelines and 300 Bcf of natural gas storage.
The company is also entering into five-year, fixed-fee contracts with Tres Palacios for 15 Bcf of firm storage capacity and 150,000 dekatherms per day of improved interruptible wheeling services.
Crestwood general partners chairman, president and chief executive officer Robert Phillips said: "Tres Palacios will immediately benefit as a result of the new long-term contract with Brookfield Infrastructure that will substantially increase the utilisation of its available storage capacity.
"With the sale of Tres Palacios to a Crestwood Midstream joint venture, Crestwood Equity will continue to benefit from cash flow growth of the underlying assets through its ownership of the incentive distribution rights of Crestwood Midstream.
"In addition, the transaction will enable Crestwood Equity to reduce debt and improve its distribution coverage and leverage ratios, and to further diversify Crestwood Midstream’s portfolio of shale-based midstream assets with long-term fee-based contracts."
