Spectra May Bid for Kinder Morgan’s Rockies Pipelines, CEO Says

Spectra Energy Corp. (SE) would consider buying natural-gas pipelines in the Rocky Mountains if Kinder Morgan (KMI) Inc. and El Paso Corp. (EP) are seeking to sell assets as part of their merger.

“If they come up for sale, just like any other pipeline, we’d look at it,” Spectra CEO Gregory Ebel said in an interview today at Bloomberg’s headquarters in New York. “There’s probably some opportunities in the south, definitely some of the Rockies assets.”

Kinder Morgan said Oct. 16 it will buy El Paso for $20.7 billion in cash and stock, creating the largest U.S. gas pipeline network. The companies may have to sell some pipelines to get federal approval, expected by the middle of the year, Kinder Morgan CEO Richard Kinder told employees the day after the deal was announced.

Spectra, based in Houston, owns 19,300 miles (31,000 kilometers) of gas transmission lines and is spending $1.3 billion to expand its network this year. The company may double its capital spending in three or four years, Ebel said.

Spectra is less likely to bid for any pipelines sold as Energy Transfer Equity LP (ETE) buys Southern Union Co. (SUG), he said.

“Kinder is probably the more likely for us to look at rather than the Southern Union-Energy Transfer deal,” Ebel said.

Companies will have to spend $6 billion to $10 billion annually during the next 20 years to connect new shale-gas fields to pipelines, according to a January 2009 study by the Interstate Natural Gas Association of America, a Washington- based industry group.

“There’s no doubt building your assets is cheaper than buying,” Ebel said. “But when you buy assets that are already built, you take out some of the execution risk,”

To contact the reporter on this story: Mike Lee in Dallas at mlee326@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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