Energy midstream giant Tallgrass Energy, which operates 10,000-plus miles of natural gas and oil pipelines and storage systems across the Lower 48, has clinched a new partner that is bringing in a bundle of funding.
The Canada Pension Plan Investment Board (CPP Investments) said it reached an agreement to invest $843 million in Tallgrass, now majority sponsored by private equity giant Blackstone.
“With a business strategy that combines traditional energy and decarbonization solutions, Tallgrass is an attractive investment opportunity because of its dual role in delivering against growing energy needs and increasing decarbonization opportunities,” CPP Investments’ Bill Rogers, global head of sustainable energies, said.
The Tallgrass natural gas portfolio stretches 7,000 miles, capable of transporting 10.3 Bcf/d-plus and storing 25 Bcf.
The operated gas systems include Cheyenne Connector, East Cheyenne Gas Storage, Rockies Express Pipeline (REX), Ruby Pipeline, Tallgrass Interstate Gas Transmission and Trailblazer Pipeline Co.
Tallgrass in late 2022 snapped up Ruby, which had declared bankruptcy. And in June, Phillips 66 agreed to sell its 25% equity interest in REX to Tallgrass for about $1.3 billion, which would give it all of the stakes. The 1,714-mile bi-directional pipeline provides 5 Bcf/d-plus between the Rockies, Appalachia and the Northeast.
The crude oil segment of Tallgrass consists of Pony Express, Powder River Express and Iron Horse. It also has nine terminals, with the capacity to transport about 700,000 b/d and store 8.3 million bbl-plus.
[Forward Look: Quickly understand where the price of natural gas is headed with these graphic day-on-day comparisons of NGI's forward curves at 70 locations. View Now.]
Several low-carbon initiatives also are underway by Tallgrass. The company has been exploring carbon dioxide transportation options that include repurposing Trailblazer. It also has explored transporting carbon-neutral natural gas through REX.
Blackstone’s Matthew Runkle, head of renewables and midstream within the Infrastructure Group, noted that over the past five years, the team has been working to “develop and operate industry-defining large-scale energy infrastructure. Having CPP Investments as a new investor will “support Tallgrass for continued growth.”
At the end of March, CPP Investments said its Sustainable Energies group had net assets totaling C$34.2 billion. Investments are in renewables, conventional energy, carbon capture and storage, distributed and energy services, and emerging and disruptive technologies.
