Enbridge announced a joint venture to connect Permian Basin natural gas to U.S. Gulf Coast

The transaction is expected to be finalized in the second quarter of 2024, pending regulatory approvals and customary closing conditions

Pipeline leader Enbridge Inc. has entered into a partnership agreement to establish a joint venture aimed at facilitating the connection of Permian Basin natural gas to liquefied natural gas (LNG) export terminals along the U.S. Gulf Coast. In collaboration with global investment manager I Squared Capital and U.S.-based pipeline firms WhiteWater and MPLX LP, the Calgary-based company unveiled its plans on Tuesday. The newly formed joint venture will undertake the development, construction, ownership, and operation of natural gas pipelines and storage assets with the objective of linking the Permian—aa significant oil-and-gas field situated in western Texas and southeast New Mexico—tto the burgeoning LNG market and growing demand on the U.S. Gulf Coast.

As part of the agreement, Enbridge will contribute its proposed Rio Bravo pipeline project to the joint venture, along with US$350 million in cash. Additionally, Enbridge will fund the initial US$150 million of post-closing capital spending required to finalize the Rio Bravo project. The joint venture will also assume ownership of the Whistler pipeline, operational since 2021, which runs from the Permian Basin to Agua Dulce, Texas. Furthermore, it will hold a 70 percent interest in the ADCC intra-state pipeline to Corpus Christi, Texas, and a 50 percent stake in the Waha gas storage facilities.