FTC approves Kinder Morgan-El Paso deal

HOUSTON, Texas - Federal regulators have approved Kinder Morgan's planned $20 billion acquisition of El Paso Corp., the company said on May 1, meaning the deal could close in May and create the largest operator of natural gas pipelines in the U.S.

The Federal Trade Commission also ended the antitrust waiting period, it said.

El Paso shareholders have already approved the deal and are set to vote on the form of payment they want to receive during a May 23 meeting.

The approval includes a previously-announced agreement to sell some assets of Kinder Morgan Energy Partners LP, including Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Co., natural gas processing and treating facilities in Wyoming and a 50-percent stake in the Rockies Express Pipeline.

Kinder Morgan Inc. (KMI) announced the plan to acquire El Paso in October, in a deal that was then valued at $20.7 billion.

Kinder Morgan has said it plans to spin off El Paso's production business while keeping its pipelines, making it America's largest natural gas pipeline operator. Kinder Morgan would control more than 80,000 miles of pipelines, allowing it to negotiate more lucrative supply deals around the country.

Kinder Morgan buying 50 percent interest in natural gas venture for $300 million

HOUSTON, Texas - Kinder Morgan Energy Partners, L.P. (KMP), on April 25 announced a definitive agreement with an investment vehicle affiliated with Kohlberg Kravis Roberts & Co. L.P., whereby KMP will purchase from KKR its 50 percent interest in the joint venture that owns the Altamont gathering, processing and treating assets (Uinta Basin in Utah) and the Camino Real Gathering System (Eagle Ford Shale in Texas) for $300 million in KMP common units.

El Paso Corp. (EP) owns the other 50 percent of the joint venture.

KMP anticipates the transaction will close subsequent to the completion of Kinder Morgan, Inc.'s (KMI) acquisition of El Paso, which is expected to occur by the end of May.

"We are pleased to reach this agreement with KKR which, upon closure of both transactions noted above, will increase Kinder Morgan's ownership in this joint venture to 100 percent - 50 percent at KMP and 50 percent at KMI," said Duane Kokinda, president of Kinder Morgan's intrastate pipelines.

Upon closing, the transaction is expected to be immediately accretive to cash distributable to KMP unitholders.

Marc Lipschultz, KKR's global head of energy and infrastructure, commented, "Since forming our joint venture over a year ago, it has been a pleasure partnering with the El Paso team on building out an exciting midstream business."

With over 1,100 miles of pipeline infrastructure, the Altamont system includes over 450 well connections with producers, and it operates a processing plant with the design capacity of 60 million cubic feet per day (MMcf/d) and a 5,600 barrel per day (b/d) natural gas liquids fractionator. The Camino Real Gathering System has 150 MMcf/d of gas gathering capacity and 110,000 b/d of oil gathering capacity.

Kinder Morgan and El Paso announce tentative election deadline of May 23

HOUSTON, Texas - Kinder Morgan, Inc. (NYSE: KMI) and El Paso Corp. (NYSE: EP) on April 16 announced that the tentative deadline for El Paso shareholders and equity award holders to elect the form of consideration they wish to receive in El Paso's pending merger with Kinder Morgan is May 23.

The election deadline may be extended, in which case Kinder Morgan will issue a press release announcing the new election deadline. The closing of the merger is expected to occur by the end of May, subject to regulatory approval. El Paso shareholders who hold shares through a bank, broker, trust company or other nominee may have an earlier election deadline and should carefully review any instructions received from their bank, broker, trust company or other nominee.

As previously announced, El Paso shareholders can elect, for each El Paso share held, either cash, Kinder Morgan common stock, or a combination of cash and Kinder Morgan common stock.

El Paso equity award holders can elect either cash or a combination of cash and Kinder Morgan common stock for all of their outstanding equity awards. All elections will be subject to proration and all El Paso shareholders and equity award holders will receive warrants to purchase Kinder Morgan common stock.

Goldman Sachs may strengthen disclosures after conflicts in Kinder-El Paso deal

NEW YORK - Goldman Sachs said it is reviewing its policies and procedures on banker conflict issues.

The goal is to strengthen how Goldman reveals important potential conflicts of interest such as the personal stock holdings of its bankers, especially as they negotiate deals.

A judge in late February determined that gas pipeline giant Kinder Morgan's proposed purchase of El Paso, a gas production and pipeline company, was fraught with conflicts of interest.

Among them: Goldman's top energy banker was advising El Paso on the deal and held a stake in Kinder Morgan. Goldman was aware of the banker's stake, the El Paso board was not.

The revelation came as the former head of Goldman's derivatives business in Europe, the Middle East and Africa lambasted the firm's culture in a New York Times opinion piece.

Officials order shutdown of 27 miles of El Paso gas pipeline in Ohio

HOUSTON, Texas - Federal officials have ordered the continued shutdown of 27 miles of natural gas pipeline in Ohio because of repeated problems with welds in the pipe, including one linked to an explosion that leveled several houses on Nov. 16.

The investigation into the cause of a Tennessee Gas Pipeline Co. LLC explosion near Glouster, Ohio, is continuing, according to an order released Nov. 17 by the federal Pipeline and Hazardous Materials Safety Administration (PHMSA).

Authorities said that a visual inspection suggests that the pipeline failed at a weld similar to those that caused problems, including an explosion and fire in northeastern Ohio, in February and March. The high-pressure pipeline, three feet in diameter, runs from Kentucky to Pennsylvania.

"I find that the continued operation of the pipeline without corrective measures would be hazardous to life, property and the environment," wrote Jeffrey D. Wiese, associate administrator for pipeline safety at PHMSA.

Those measures include the shutdown, operating more than 200 miles of the affected line at reduced pressures, performing mechanical and metallurgical tests, and completing an analysis of the root cause of the failure within 60 days.

Gretchen Krueger, a spokeswoman for El Paso Corp., which owns Tennessee Gas, said the company has been working closely with federal authorities since the first report of the Nov. 16 explosion and will fully comply with the order.

Ms. Kruger added the company is in "full compliance with the consent order" imposed after the failures earlier this year and is working to implement corrective measures it required.

LNG terminal co-owned by GE begins operating on Gulf Coast

PASCAGOULA, Miss. - GE Energy Financial Services, a unit of GE. On Oct. 27 announced that its co-owned Gulf LNG regasification and liquefied natural gas storage facility on the Gulf of Mexico has successfully begun operations.

GE made the announcement at a ribbon-cutting ceremony at the facility in Pascagoula, Miss., joined by Gov. Haley Barbour and executives of El Paso Corp.

"After three and a half years of construction, this $1.1 billion facility was completed on-time and on-budget and forms an important part of our nation's energy infrastructure," said Dan Castagnola, a managing director of GE Energy Financial Services in Houston.

"Our co-ownership of this facility reflects GE Energy Financial Services' strategy of supporting long-term, critical infrastructure projects that help meet energy demand and draw on GE's strengths and expertise in energy."

The terminal, operated by a subsidiary of El Paso Corp., is located adjacent to the Bayou Casotte Ship Channel in the Port of Pascagoula on the Gulf Coast. It receives, stores and regasifies imported liquefied natural gas (LNG).

The terminal consists of two 160,000 cubic meter storage tanks with a combined capacity of 6.6 billion cubic feet (Bcf); 10 vaporizers, providing a base send-out capacity of 1.3 Bcf/d; and five miles of 36-inch pipeline connecting to downstream pipelines owned by Gulfstream, Destin, Transco, and Florida Gas Transmission. The pipelines provide access to the Pascagoula Gas Processing Plant operated by BP America Production Co.

The Gulf LNG facility is contracted under 20-year firm service agreements for all of its capacity with a group of LNG producers, including several major oil and gas companies, to support the facility and provide a source of LNG.