GIP and El Paso Partner to Build Ruby Pipeline

July 2009 Vol. 236 No. 7

Global Infrastructure Partners, a $5.64 billion infrastructure private equity fund, and El Paso Corporation announced July 27 that they have partnered to construct, own and operate the Ruby interstate natural gas pipeline.

Ruby is an approximately 675-mile natural gas pipeline that will transport gas from the growing Rocky Mountain supply region to United States West Coast markets. It will run from Opal, Wyoming, to Malin, Oregon, on the California/Oregon border. The necessary investment is estimated at $3 billion, with Ruby expected to be placed into service in March 2011.

GIP has committed up to $700 million of funding during construction through (i) providing Ruby with up to $555 million in the form of a senior secured loan and/or convertible preferred equity and (ii) indirectly providing Ruby with a further $145 million through an investment in convertible preferred equity of Cheyenne Plains Pipeline, which is an existing natural gas pipeline wholly owned by El Paso. El Paso will assume all construction and development obligations in connection with the construction of Ruby. Upon completion of construction, GIP and El Paso will own the common equity of Ruby on a 50/50 basis.