Dec. 7 (Bloomberg) -- El Paso Corp., owner of the largest system of interstate natural-gas pipelines in North America, said it is forming a joint venture with KKR & Co. to develop projects.
KKR, based in New York, will acquire a 50 percent interest in El Paso’s Altamont gas-gathering and processing assets in Utah for $125 million, Houston-based El Paso said today in a statement. The companies also will each invest up to about $500 million in future projects, such as in the Marcellus and Eagle Ford shale formations.
El Paso and KKR will each own half of the new venture, which will be operated by a unit of El Paso. El Paso said the transaction is scheduled to close by the end of 2010. Producers are tapping into dense shale rock formations to find new supplies of gas, oil and petroleum liquids across the U.S. and Canada, increasing the need for pipelines to move the hydrocarbons to markets.
El Paso’s Altamont properties include about 800 miles (1,300 kilometers) of pipelines in addition to some processing capacity, according to today’s statement. The company said the Altamont field in Utah is one of its “core oil programs,” and it sees expanding from two to three rigs in 2011 and six by 2013.
Future midstream projects that will see investments from El Paso and KKR include the Marcellus Ethane Pipeline System in the Marcellus, on which El Paso is partnering with Spectra Energy Corp, as well as the Camino Real Pipeline in the Eagle Ford Shale of Texas.
El Paso fell 4 cents to $13.76 at 4:09 p.m. in New York Stock Exchange composite trading. KKR rose 18 cents, or 1.4 percent, to $13.07.
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