Stonepeak to Acquire Interest in KAPS
NEW YORK, NY – December 12, 2022 – Stonepeak Partners LP (together with its affiliates, “Stonepeak”), a leading alternative investment firm specializing in infrastructure and real assets, today announced that it has entered into an agreement to acquire a 50 percent interest in KAPS, a Canadian natural gas liquids (“NGL”) pipeline system connecting Northwest Alberta to energy hubs in Edmonton and Fort Saskatchewan. Keyera Corp. (TSX: KEY) will continue to own the remaining 50 percent of KAPS and operate the asset.
KAPS is an approximately 560 kilometer dual pipeline system linking Montney and Duvernay production in Western Canada to Keyera’s fractionation and logistics assets in Fort Saskatchewan. The system is anchored by secure, long-term, take-or-pay revenues with a broad customer base that includes meaningful commitments from investment grade counterparties. It also has the ability to expand to include additional pump stations in a cost-effective manner should the basin require additional capacity.
KAPS’ infrastructure is well-positioned to support decarbonization and global energy security goals by supporting the ongoing global displacement of coal by natural gas. Stonepeak believes this will be particularly impactful as the liquified natural gas (“LNG”) corridor from Western Canada to Asia continues to expand in the near-term. KAPS provides a competitive transportation alternative that allows producers to grow their natural gas production in advance of additional LNG in-service both in Western Canada and the U.S. Gulf Coast. The project strengthens the economic viability of Western Canadian LNG facilities, whose product reaches Asian markets with approximately 30 percent reduced shipping emissions relative to U.S. Gulf Coast originated routes. Additionally, KAPS has the ability to help diminish emissions output on a local level as their transportation of NGLs by pipeline reduces the emissions intensity from products that would otherwise be moved by truck.
“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 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.”
Similar to Stonepeak’s approach to responsibly stewarding critical infrastructure assets, Keyera is committed to responsible ownership and the implementation of ESG initiatives within its business. Keyera has committed to reducing its greenhouse gas intensity by 25 percent by 2025 and 50 percent by 2035 by decarbonizing its current base operations and pursuing energy transition investment opportunities leveraging the existing asset base, core competencies, and strong customer relationships.
The transaction is subject to regulatory approvals and is expected to close in the first quarter of 2023.
Goldman Sachs & Co. LLC, MUFG Bank Ltd., and Mizuho Securities USA LLC are serving as financial advisors to Stonepeak. Sidley Austin LLP and Stikeman Elliott LLP are serving as legal counsel.
Stonepeak is a leading alternative investment firm specializing in infrastructure and real assets with approximately $51.7 billion of assets under management. Through its investment in defensive, hard-asset businesses globally, Stonepeak aims to create value for its investors and portfolio companies, and to have a positive impact on the communities in which it operates. Stonepeak sponsors investment vehicles focused on private equity and credit. The firm provides capital, operational support, and committed partnership to sustainably grow investments in its target sectors, which include communications, energy transition, transport and logistics, and social infrastructure. Stonepeak is headquartered in New York with offices in Austin, Hong Kong, Houston, London, and Sydney. For more information, please visit www.stonepeak.com.