Kinder Morgan and Southern Company announced Sunday its natural gas pipeline strategic venture designed to advance both companies’ leadership in energy infrastructure development by way of Southern Company’s acquisition of a 50 percent equity interest in the Southern Natural Gas (SNG) pipeline system, which will continue to be run by Kinder Morgan.
The SNG pipeline system runs for 7,600 miles, connecting natural gas supply basins in Texas, Louisiana, Mississippi, Alabama, and the Gulf of Mexico to markets in Louisiana, Mississippi, Alabama, Florida, Georgia, South Carolina, and Tennessee.
“This transaction is consistent with the infrastructure development strategy we have discussed for well over a year. The company’s strategic venture with Kinder Morgan, combined with our recent additions, AGL Resources and PowerSecure, underscore Southern Company’s leadership position in electricity and natural gas and our commitment to developing America’s energy infrastructure,” said Southern Company Chairman, President and CEO Thomas A. Fanning. “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 Company and Kinder Morgan, two largely known natural gas leaders in the nation, will work together to advance both companies’ efforts to develop infrastructure that is important to the nation’s energy future.
“Southern Company has been a valued customer of SNG for many years, and this agreement draws on the strengths of both companies,” said Norman G. Holmes, president of Kinder Morgan South Region Pipelines. “We are very pleased to deepen our relationship with them and excited about the growth opportunities this strategic relationship will provide.”
Kinder Morgan president and CEO, Steve Kean, also stated that the company plans to use the proceeds from the transaction to reduce debt at Kinder Morgan, which will push the company another step toward achieving its goal to strengthen its balance sheet and position the company for long-term value creation.
The companies expect to complete the transaction in the third or fourth quarter of this year.