Strategic pipeline joint venture formed by leading energy firms

In a landmark transaction, WhiteWater, I Squared, MPLX LP (NYSE: MPLX), and Enbridge Inc. (TSX: ENB) (NYSE: ENB) have announced a definitive agreement to combine the Whistler Pipeline and Rio Bravo Pipeline into a newly established joint venture. This strategic collaboration is poised to create a formidable platform in the energy sector, enhancing connectivity between Permian Basin supply and Gulf Coast LNG export markets.

The agreement outlines that Enbridge Inc. will contribute its wholly-owned Rio Bravo Pipeline project along with additional cash contributions for an equity stake in the joint venture. Upon the deal’s closure, projected for the second quarter of 2024, the ownership stakes will be allocated as follows: WhiteWater/I Squared holding 50.6%, MPLX LP at 30.4%, and Enbridge Inc. with 19.0%. Enbridge Inc. will also retain a 25% economic interest in the Rio Bravo Pipeline project, incorporating specific redemption rights for the joint venture partners. WhiteWater is set to continue managing the joint venture’s assets, including the Rio Bravo Pipeline project.

This strategic alliance is expected to significantly benefit the joint venture’s clientele by linking Permian Basin supply to incremental LNG export opportunities, courtesy of the Rio Bravo’s integration with NextDecade’s Rio Grande LNG facility. Furthermore, the formation of this joint venture is anticipated to facilitate the development of additional pipeline projects aimed at connecting Permian supply with export markets along the Gulf Coast.

Leaders from the participating companies have expressed positive outlooks regarding the joint venture. Christer Rundlof, CEO of WhiteWater, highlighted the deal’s potential to extend contract durations, enhance strategic partnerships, and bolster development opportunities within the Gulf Coast LNG sector. Dave Heppner, Senior VP of MPLX, and Cynthia Hansen, EVP and President of Enbridge’s Gas Transmission and Midstream, both emphasized the strategic benefits of this collaboration for future growth and the natural gas value chain enhancement in the Permian Basin and South Texas. Matt Schatzman, Chairman and CEO of NextDecade, acknowledged the critical role of this joint venture in supporting the Rio Grande LNG project as a key market for Permian Basin gas.

The Whistler Pipeline, with a capacity of approximately 2.5 billion cubic feet per day, comprises around 450 miles of 42-inch diameter pipeline. This system is designed to transport natural gas from the Permian Basin to Agua Dulce, Texas, ensuring direct connections to Corpus Christi and the Gulf Coast. Additionally, the pipeline features an approximately 85-mile, 36-inch diameter lateral extending to the Midland Basin.