Blackstone has agreed to purchase a 32.4% stake in the Rover Pipeline project from Energy Transfer Partners (ETP) for about $1.57 billion. Still under construction, the 700-mile-plus pipeline has been plagued by delays stemming from a number of spills that have prompted government intervention. Upon completion, the $4.2 billion endeavor is expected to transport 3.25 billion cubic feet of natural gas per day across the US and Canada.
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Blackstone's investment will consist of buying a 49.9% stake in ET Rover Pipeline, an ETP subsidiary that owns a 65% stake in the larger Rover project. Funds for the investment will go toward paying down the construction costs owed by ETP, which also operates the divisive Dakota Access Pipeline.
The company’s latest project hasn’t been free of trouble, either. In May, the federal government temporarily banned ETP from drilling below waterways and roads after the pipeline spilled some 2 million gallons of a water and clay mix into a patch of Ohio wetlands. That order delayed the project’s first phase to late summer, per Reuters. Then, last month, West Virginia ordered the company to stop work in certain areas due to environmental violations.
Blackstone has been active in the energy sector in recent months. In April, the buyout titan agreed to buy oil pipeline operator EagleClaw Midstream for about $2 billion after pledging to invest $1.5 billion in the Permian Basin last August. Both moves buck a trend in the US energy services sector, which has experienced a drop in PE activity this year. There have been 34 such PE-backed deals in the space in 2017 so far, according to the PitchBook Platform. At that pace, the number of deals in the energy services industry will fall well short of the 119 completed transactions last year.
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Article by Adam Lewis, PitchBook