Stonepeak to acquire stake in natural gas liquids pipeline system KAPS

• The deal is expected to close in Q1 2023
• KAPS is a roughly 560-kilometer dual pipeline system linking Montney and Duvernay production to Keyera’s fractionation and logistics assets in Fort Saskatchewan
• Its infrastructure is well-positioned to support decarbonization and global energy security goals by supporting the ongoing displacement of coal by natural gas

Stonepeak has agreed to acquire a 50 percent interest in KAPS, a Canadian natural gas liquids pipeline system. Keyera Corp, a Calgary-based midstream energy business, will continue to own the remaining 50 percent and operate the asset.

No financial terms were disclosed. The deal is expected to close in the first quarter of 2023.

KAPS is a roughly 560-kilometer dual pipeline system linking Montney and Duvernay production in Western Canada to Keyera’s fractionation and logistics assets in Fort Saskatchewan.

The company’s infrastructure is well-positioned to support decarbonization and global energy security goals by supporting the ongoing displacement of coal by natural gas, Stonepeak said in a statement. Stonepeak believes this will be particularly impactful as the liquified natural gas corridor from Western Canada to Asia continues to expand in the near-term.

“We believe that North American hydrocarbons, particularly natural gas, will continue to be an important component of the global energy mix for the foreseeable future, especially as efforts to decarbonize East Asia continue – natural gas production growth in Western Canada will play a critical role in those efforts,” said Anthony Borreca, senior managing director at Stonepeak, in a statement. “In our view, this makes KAPS a strong fit for Stonepeak’s opportunities strategy. We look forward to working closely with Keyera and the KAPS team as a trusted partner who is committed to the responsible ownership of traditional hydrocarbon infrastructure that plays a critical role in the global energy transition.”

Based in New York, Stonepeak is an alternative investment firm specializing in infrastructure and real assets with about $51.7 billion of assets under management.

Goldman Sachs & Co, MUFG Bank and Mizuho Securities USA are serving as financial advisors to Stonepeak. Sidley Austin and Stikeman Elliott are serving as legal counsel.

Update: In a separate release issued by Pembina Pipeline Corp, Pembina Gas Infrastructure (PGI), owned 60 percent by Pembina and 40 percent by KKR’s global infrastructure funds, was identified as the seller.

Pembina said PGI will receive cash proceeds of C$662.5 million upon closing of the sale .