Sempra Energy, the San Diego-based Fortune 500 company, took another step Monday in what the energy giant has called its “portfolio optimization” plan by announcing the sale of $332 million in natural gas storage assets in the Deep South.
Through one of its subsidiaries, Sempra agreed to the deal with ArcLight Capital Partners, a private equity firm based in Boston that focuses on energy infrastructure. The sale includes the Mississippi Hub storage facility in Simpson County, Mississippi and the Bay Gas storage facility in southwestern Alabama.
The Mississippi Hub facility boasts a working capacity of 22.3 billion cubic feet (Bcf) of natural gas while the Bay Gas site comprises five underground caverns with a working capacity of 20.4 Bcf of natural gas.
The transaction will be a cash deal, subject to adjustments for working capital, and comes less than three weeks after Sempra sold off its U.S. solar assets — as well as solar and battery storage development projects and ownership interest in one wind facility — to Consolidated Edison of New York for about $1.6 billion in cash.
Last June, Sempra executives announced that after conducting “a comprehensive strategic review of its businesses and asset portfolio,” the company would sell several of its energy infrastructure holdings to “sharpen the company’s strategic focus and create value for all shareholders.”
Sempra’s new CEO, Jeff Martin, said at the time that while natural gas plays “an important role” in energy markets, the facilities in Alabama and Mississippi were “no longer core to our business strategy.”
Joseph Householder, Sempra’s president and chief operating officer, said in a statement Monday the sale of the natural gas storage facilities and the Consolidated Edison deal enable “us to reallocate capital to further strengthen our balance sheet and support Sempra Energy’s future growth opportunities.”
Martin and Householder frequently mention they are committed to making Sempra “North America’s premier energy infrastructure company.”
The only assets remaining that Sempra intends to sell are comprised of two fully-owned wind farms (one in Michigan and one in Minnesota) and five wind facilities jointly owned with BP Wind in Hawaii, Colorado, Kansas, Indiana and Pennsylvania.
The deal with ArLight involves non-utility natural gas assets and is expected to be completed in the first quarter of this year, subject to customary closing conditions. At closing, ArcLight will own 100 percent of Mississippi Hub and Bay Gas storage facilities.
The facilities will become part of the Enstor natural gas storage platform, which ArcLight acquired in 2018. Based in Houston, Enstor owns and operates underground natural gas storage facilities in the Gulf Coast and the Southwest.
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