Energy Transfer, Williams plan to sell 50% stake in Florida gas pipeline

By MATTHEW MONKS
Bloomberg

Energy Transfer and Williams Cos. are planning to sell Williams’s stake in one of Florida’s main interstate pipelines in order to win regulatory approval for their $37.7 billion merger, people with knowledge of the matter said.

The companies anticipate that a sale of Williams’s 50% stake in the Gulfstream Natural Gas System will be required by the Federal Trade Commission, which regulates competition in the energy industry, said the people, who asked not to be identified because the information is private.

Gulfstream, the largest pipeline that runs through the Gulf of Mexico, had about $600 million of equity and $350 million of long-term debt at June 30, according to company filings. Williams may explore selling its stake to Spectra Energy, which already owns the other half, one of the people said.

A forced sale is probable because Energy Transfer owns half of the Florida Gas Transmission Pipeline, the only other major interstate pipeline currently operating in the state. Energy Transfer aims to hold onto that 5,400-mile (8,688-kilometer) pipeline, a 50-50 joint venture with Kinder Morgan, the people said. Energy Transfer won’t sell assets if it doesn’t have to, they said.

Representatives for Williams and Energy Transfer declined to comment, while Spectra didn’t respond to requests for comment.

Energy Transfer is buying Tulsa, Oklahoma-based Williams to extend its reach into the Marcellus Shale Basin, a massive swathe of gas-producing rock under New York, Pennsylvania, Ohio and Virginia. The companies -- which go head-to-head in few heavily concentrated markets outside of Florida -- don’t anticipate resistance from antitrust officials elsewhere, the people said.

Spectra is in the process of building a third big interstate pipeline in Florida with NextEra Energy called Sabal Trail Transmission, which should open in 2017.

Forced asset sales aren’t unusual in big mergers among pipeline operators. Kinder Morgan sold assets in the Rocky Mountain region in order to buy El Paso Corp. in 2012. Those assets became the bulk of Tallgrass Energy.

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