Southern Co. to acquire stake in another gas pipeline company

[private]The Southern Co. has announced it will spend $1.5 billion for a 50 percent stake in a natural gas pipeline system operated by Kinder Morgan Inc., a Texas-based energy firm that earlier wanted to build a petroleum pipeline parallel to the Savannah River in eastern Georgia.

Southern will acquire an equity interest in Southern Natural Gas (SNG), with Kinder Morgan continuing to operate the system. The companies will also pursue “specific growth opportunities to develop natural gas infrastructure for the strategic venture.”

“Our new ownership stake in SNG will position Southern Company for future growth opportunities and enhanced access to natural gas, which are expected to benefit customers and investors alike,” Southern CEO Tom Fanning said in a statement.

Southern Co. said it will finance the initial purchase of a $1.5 billion ownership, as well as future projects, “in a credit-supportive manner,” but did not provide further details.

Southern Co. just finalized a $12 billion merger with natural gas supplier AGL Resources, making it the second-largest utility conglomerate in the U.S.

Kinder Morgan announced a $1 billion project last year to extend a petroleum pipeline from South Carolina to Georgia and Florida over a route parallel to the Savannah River.  Georgia DOT officials denied a permit for that project and the General Assembly later passed legislation putting a moratorium on eminent domain condemnations of property needed for a pipeline.

Kinder Morgan subsequently said it was suspending the Palmetto Pipeline project.

SNG is a 7,600-mile pipeline system connecting sites in Texas, Louisiana, Mississippi, Alabama and the Gulf of Mexico to markets in Louisiana, Mississippi, Alabama, Florida, Georgia, South Carolina and Tennessee.

One of the SNG pipelines extends near a site in Stewart County that Southern Co. and Georgia Power recently purchased as the potential site of a new nuclear plant.

Georgia Power has asked the Public Service Commission to charge off the $175 million cost of site preparation and licensing applications for a nuclear plant to its customers, but commissioners like Lauren “Bubba” McDonald have balked at that.

There has been considerable speculation among industry lobbyists and environmental activists that Georgia Power will actually build a gas-fired power plant on the Stewart County site south of Columbus.

A nuclear plant, they point out, would require the diversion of too much water from an overtaxed Chattahoochee River.

“Now that Southern Company has acquired a 50 percent stake in Kinder Morgan, aren’t they going to try and enhance or at least protect their investment by using the natural gas pipeline assets that are literally in their backyard?” asked Bobby Baker, a former PSC member who now represents the Southern Alliance for Clean Energy.

“The preliminary work we are doing now regarding the Stewart County work is specifically to preserve the option to potentially pursue new nuclear at that site,” Georgia Power spokesman Jacob Hawkins said.

“We do intend to use the land to support future load growth, whether that would be with nuclear resources or any other generating resource, which could include natural gas,” Hawkins said.

© 2016 by The Georgia Report

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Tags: Kinder Morgan , SNG pipeline system , Southern Co.