ArcLight Announces $865 Million Acquisition of Strategic Pipeline Interest

Rhea-AI Summary

ArcLight Capital Partners has completed the acquisition of a 25% equity interest in Gulf Coast Express Pipeline (GCX) from Phillips 66 for $865 million. GCX will now be jointly owned by Kinder Morgan (NYSE: KMI) and ArcLight affiliates, with KMI continuing operations.

GCX is a 500-mile natural gas pipeline with approximately 2 Bcf/d capacity, supported by long-term committed contracts. The pipeline provides critical gas takeaway service from the Permian Basin to US Gulf Coast markets, including LNG export facilities in South Texas.

ArcLight, which has managed over 47,000 miles of electric and gas transmission since 2001, views this acquisition as strategic positioning for growing power demand needs, particularly related to AI and data center infrastructure. The company sees GCX as well-positioned to benefit from increasing Permian production and long-term LNG, power, and industrial demand growth.

Positive

• Strategic acquisition of 25% stake in major pipeline infrastructure for $865 million
• Pipeline has 2 Bcf/d capacity backed by long-term contracts
• Asset positioned to benefit from growing LNG export market and data center demand
• Partnership with established operator Kinder Morgan

Negative

• Significant capital expenditure of $865 million
• Dependence on Permian Basin production levels

BOSTON, Feb. 3, 2025 /PRNewswire/ -- ArcLight Capital Partners, LLC and affiliates (collectively, "ArcLight") announced today that it has completed the acquisition of a 25% equity interest in Gulf Coast Express Pipeline LLC ("GCX") for $865 million from an affiliate of Phillips 66 (NYSE: PSX).  Going forward, GCX will be jointly owned by subsidiaries of Kinder Morgan, Inc. (NYSE: KMI) and affiliates of ArcLight. GCX will continue to be operated by a subsidiary of KMI.

GCX is a premier, 500-mile natural gas pipeline with approximately 2 Bcf/d of capacity that is underpinned by a high-quality array of shippers under long-term committed contracts. GCX provides critical residue gas takeaway service from the Permian Basin to key US Gulf Coast end-markets, including key growing demand regions such as the growing liquefied natural gas ("LNG") export market in South Texas.

Since 2001, ArcLight has owned, controlled, or operated over 47,000 miles of electric and gas transmission, making it one of the largest private owners of natural gas related transmission infrastructure.

"As the U.S. seeks to meet the rapidly growing power demand needs associated with AI and data center infrastructure, we believe more natural gas related infrastructure, both power and midstream assets, will be needed to meet this objective.  This acquisition builds on our history dating back to 2001 of investing in critical gas infrastructure, ability to be a value-added partner, and expands our strategic partnership with Kinder Morgan," said Dan Revers, Founder of ArcLight.

"We believe GCX represents a critical-path, strategic natural gas infrastructure asset with opportunities for growth," said Lucius Taylor, Partner at ArcLight. "As one of the largest, lowest cost transmission assets in the region, we believe GCX is well positioned to capitalize on the dual tailwinds of growing Permian production and long-term LNG, power, and industrial demand growth."

Barclays Capital Inc. acted as financial advisor and Latham & Watkins LLP acted as legal counsel to ArcLight on the transaction.

About ArcLight
ArcLight is a leading infrastructure investor which has been investing in critical electrification infrastructure since its founding in 2001.  ArcLight has owned, controlled or operated over ~65 GW of assets and 47,000 miles of electric and gas transmission and storage infrastructure representing $80 billion of enterprise value. ArcLight has a long and proven track record of value-added investing across its core investment sectors including power, hydro, solar, wind, battery storage, electric transmission and natural gas transmission and storage infrastructure to support the growing need for power, reliability, security, and sustainability. ArcLight's team employs an operationally intensive investment approach that benefits from its dedicated in-house strategic, technical, operational, and commercial specialists, as well as the firm's ~1,900-person asset management partner. For more information, please visit www.arclight.com.

 

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SOURCE ArcLight Capital Partners

FAQ

What is the value of ArcLight's acquisition of GCX pipeline stake from Phillips 66?

ArcLight acquired a 25% equity interest in Gulf Coast Express Pipeline (GCX) from Phillips 66 for $865 million.

What is the capacity of the Gulf Coast Express Pipeline operated by KMI?

The Gulf Coast Express Pipeline has approximately 2 Bcf/d of capacity and spans 500 miles.

Who will operate the GCX pipeline after ArcLight's acquisition?

A subsidiary of Kinder Morgan (KMI) will continue to operate the GCX pipeline after the acquisition.

What markets does the GCX pipeline serve?

GCX provides natural gas takeaway service from the Permian Basin to US Gulf Coast markets, particularly serving LNG export facilities in South Texas.

How does the GCX acquisition align with future energy demand?

The acquisition positions ArcLight to meet growing power demand needs related to AI and data center infrastructure, as well as increasing LNG, power, and industrial demand growth.