A potential sale would see Southwest Gas paying close to $2bn, including debt, reported Reuters citing people familiar with the development.
The move follows the launch of auction process to divest Questar by Dominion following the termination of a sale deal with the energy arm of Warren Buffett’s Berkshire Hathaway earlier this year due to regulatory concerns.
Dominion signed the deal with Berkshire Hathaway Energy in July 2020 to sell its entire gas infrastructure business.
Berkshire Hathaway agreed to pay $1.3bn in cash for Questar and assume $430m in debt.
The transaction involved more than 12,392km of natural gas transmission lines, with about 20.8 billion cubic feet (bcf) per day of transportation capacity.
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It also included 900bcf of operated natural gas storage, as well as the partial ownership of an LNG export, import and storage facility.
Additionally, the deal included a 100% stake in Dominion Energy Transmission, Questar Pipeline and Carolina Gas Transmission, as well as the 50% stake in Iroquois Gas Transmission System.
According to Reuters, Southwest Gas’ offer for Questar Pipeline would be an improvement on the deal signed with Berkshire Hathaway.
Upon completion of the negotiations, a deal would be signed by Dominion with Southwest Gas as early as this week, according to the sources.
Questar operates 1,867 miles (3,005km) of natural gas pipeline with connections to other pipeline systems in the west and mid-west US.
The firm also owns the Clay Basin storage facility, the underground storage reservoir located in the Rocky Mountains.
Southwest Gas anticipates the acquisition to mark a northward expansion of its natural gas operations while boosting its regulated operations.
The company also owns Centuri, a company engaged in services pipelines.