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(Reuters) – Canadian energy company Enbridge said on Thursday it had agreed to form a joint venture with KKR and Apollo to invest about C$2.7 billion ($1.95 billion) in expansions of its Westcoast natural gas pipeline system in British Columbia.
Asset managers are increasingly investing in generation and pipeline assets as demand for natural gas infrastructure grows rapidly amid rising LNG exports and the proliferation of data centers.
Demand for natural gas infrastructure in Western Canada and the U.S. Pacific Northwest is also growing, with Enbridge’s Westcoast system providing a route to international LNG markets.
Under the agreement, KKR and Apollo will fund the Aspen Point and Sunrise expansion projects, while Enbridge will receive C$700 million in cash at closing and retain majority ownership and operational control of the pipeline.
The Westcoast natural gas pipeline system stretches 2,900 kilometers (1,802 miles) from northeast British Columbia to the Canada-U.S. border, with a current capacity of 3.6 billion cubic feet of natural gas per day (Bcf/d).
The Aspen expansion project is expected to add 535 million cubic feet per day (mmcf/d) of new transportation capacity after entering service in 2026.
Meanwhile, the Sunrise expansion project is expected to add 300 mmcf/d of natural gas capacity in B.C. and enter service in late 2028, following which, the total capacity of the Westcoast system will rise to 3.9 Bcf/d.
Both the expansion projects already have regulatory approval and are commercially underpinned by long-term take-or-pay contracts.
Enbridge said it has the option to repurchase the investors’ interest in the joint venture at any time between the seventh and 14th year following close.
($1 = 1.3883 Canadian dollars)
Reporting by Vallari Srivastava in Bengaluru; Editing by Shreya Biswas
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