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Texas-based EnCap Flatrock Midstream is considering a sale of gas pipeline operator Momentum Midstream in a deal that could fetch $5 billion.
According to a Bloomberg report citing unnamed sources, the venture capital firm is currently talking with financial advisers to find a buyer. The sources noted that talks are in their early stages and EnCap Flatrock Midstream may eventually decide against a sale.
If it does sell Momentum Midstream, however, it would make one of the largest deals in the oil and gas pipeline space, after the Brookfield Infrastructure Partners acquisition of Colonial Enterprises for $9 billion.
Momentum Midstream operates a network of 4,000 miles of pipelines with a system capacity of 6 billion cu ft of natural gas daily. The company reports some 4 billion cu ft in minimum volume commitments and 20 billion cu ft in daily connectivity via 91 interconnections. Momentum services 10 LNG-producing facilities and 26 power plants.
Natural gas pipelines have become coveted assets in the energy space amid soaring demand for gas from the tech industry. The demand trends have prompted a massive pipeline investment rush, with a total of 12 projects for new or expanded gas pipelines set to be completed this year across Texas, Louisiana, and Oklahoma.
These projects are set to boost the U.S. Gulf Coast region’s capacity to transport natural gas by 13%, per data compiled by Bloomberg on the basis of EIA estimates. That would be the biggest expansion of pipeline capacity in one year since the dawn of the shale gas boom in 2008.
Companies have committed $50 billion worth of investments in new gas pipelines that would add 8,800 miles of new pipeline in the United States, energy consultancy Wood Mackenzie said last year, noting that this time the investment wave was led by producers of liquefied natural gas, power utilities, and Big Tech, which is on a data center construction spree amid the heating AI race.
