Spectra Energy Corporation (SE) and Spectra Energy Partners (SEP) announced that they have entered into an agreement with ConocoPhillips Company (COP) through their affiliate – Spectra Energy Transmission II, LLC (“SET”). Per the agreement, the duo would wholly acquire the equity interests in Brazoria Interconnector Gas Pipeline, LLC (“BIG”) from Conoco. The acquisition is expected to close in the second quarter of 2016.
The BIG Pipeline is a 42-inch natural gas pipeline in Brazoria County, TX, with a capacity of approximately 1.8 billion cubic feet per day. It extends 30.5 miles from Stratton Ridge on its south end to a point near Iowa Colony in northern Brazoria County.
The newly acquired BIG Pipeline will be a component of the Stratton Ridge Project, an expansion project of the Texas Eastern Transmission pipeline system to deliver up to 400,000 dekatherms per day of natural gas to Stratton Ridge, TX. The Stratton Ridge Project, including the BIG Pipeline acquisition, has an expected capital expenditure of approximately $200 million and is anticipated to be in service the first quarter of 2019.
Spectra Energy is one of North America's leading pipeline and midstream companies. Based in Houston, TX, the company's operations in the United States and Canada include more than 22,000 miles of natural gas, natural gas liquids, and crude oil pipelines; approximately 305 billion cubic feet (Bcf) of natural gas storage; 4.8 million barrels of crude oil storage; and natural gas gathering, processing, and local distribution operations.
Management remains optimistic on its future performance as its expansion program is on track. With its market leading position, diversified asset portfolio and strong investment opportunities, we expect Spectra Energy to sustain its growth momentum. Additionally, Spectra plans to invest $1 billion per year through 2015 in fee-based gas infrastructure growth projects.
The company expects to commission around 8 projects through 2016. Among these, Southern Hills and Sand Hills Pipelines, Front Range Pipeline and Texas Express Pipeline are expected to come online in the near future.
However, Spectra’s results are vulnerable to fluctuations in natural gas markets. The proposed liquid-rich drilling activities by the company clearly suggest that volatility in natural gas prices will change little going forward. Major investments in several projects in Canada also expose Spectra to fluctuations in currency rates that may affect its operations.
Spectra Energy belongs to the oil/production pipeline industry along with its peer Cheniere Energy Partners LP (CQP).
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