ArcLight Acquires $857 Million Stake in Kinder Morgan’s Gulf Coast Express Pipeline

By Mary Holcomb, P&GJ Digital Editor

(P&GJ) — ArcLight Capital Partners has closed a $857 million deal to acquire Targa Resources’ wholly-owned subsidiary, which owns a 25% stake in the Gulf Coast Express Pipeline (GCX) in the Permian Basin.

The 853-km (530-mile) Gulf Coast Express project, which was commissioned in 2019, has the capacity to transport up to two billion cubic feet per day of natural gas.

The project runs from the Waha Hub near Coyanosa, Texas, in the Permian basin, and terminates near Agua Dulce, Texas.

GCX is operated by Kinder Morgan Inc. and provides critical residue gas takeaway service from the Permian Basin to key U.S. Gulf Coast end-markets, including key emerging demand regions such as the growing LNG export market in South Texas.

"ArcLight is pleased to acquire newly constructed, critical-path midstream infrastructure to assist continued energy transition efforts," said Lucius Taylor, Managing Director at ArcLight. "We strongly believe that, alongside our operating partners, GCX will continue to help supply growing global gas demand by bringing responsibly-sourced Permian Basin natural gas production to key demand markets as we transition to a clean and secure energy future."

On Monday, GCX launched an open season to solicit commitments for the expansion project on its system. Upon achieving a final investment decision (FID), the project will increase GCX’s capacity by nearly 570 million cubic feet per day (MMcf/d).

The project will primarily involve compression expansions on the GCX system to increase natural gas deliveries from the Permian Basin to South Texas markets. Pending customer commitments, the target in-service date for the project is December 1, 2023.

Macquarie Capital (USA) Inc. acted as financial advisor and Latham & Watkins LLP acted as legal counsel to ArcLight on the transaction.

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