Sempra Energy Subsidiary To Sell U.S. Natural Gas Storage Assets To ArcLight Capital Partners

Written By: Jen Neville
January 3, 2019

asset management

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Sempra Energy recently announced that its subsidiary had entered into an agreement to sell its non-utility U.S. natural gas storage facilities to an affiliate of ArcLight Capital Partners for $332 million in cash, subject to adjustments for working capital. The facilities would become part of the Enstor natural gas storage platform, which ArcLight had acquired in 2018.

"Our agreement to sell our non-utility U.S. natural gas storage assets is an important component to achieving our portfolio-optimization goals we previously," stated Joseph A. Householder, president and chief operating officer of Sempra Energy. "Completing this sale, along with the recently announced sale of our non-utility U.S. solar assets, enables us to reallocate capital to further strengthen our balance sheet and support Sempra Energy's future growth opportunities."

The gas storage assets included in the sale to ArcLight are the Mississippi Hub storage facility in Simpson County, Miss., with a working capacity of 22.3 billion cubic feet of natural gas, and the Bay Gas storage facility in Southwest Alabama, which comprises five underground caverns with a working capacity of 20.4 Bcf of natural gas.

Sempra Energy's subsidiary currently owns approximately 91 percent of Bay Gas storage facility. Immediately prior to the sale, Sempra Energy's subsidiary would purchase the approximate 9-percent interest from a minority owner and include it in the sale to ArcLight.

The sale of the non-utility natural gas assets to ArcLight expects to be completed in the first quarter 2019, subject to customary closing conditions. At closing, ArcLight will own 100 percent of Mississippi Hub and Bay Gas storage facilities.

Sempra Energy's financial advisor for this transaction is Wells Fargo Securities, LLC and its legal advisor is Jones Day.

Last month, Sempra Energy announced that it had completed the sale of its non-utility U.S. operating solar assets, solar and battery storage development projects, as well as its ownership interest in one wind facility, to Consolidated Edison, Inc. for approximately $1.6 billion in cash.

An active sales process continues for Sempra Energy's non-utility U.S. wind assets.

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