Enbridge Inc. further expanded its presence in the Lower 48 by acquiring a string of renewable natural gas (RNG) facilities.
The Calgary-based company said that, as part of ongoing efforts to build a U.S. RNG manufacturing and transportation business, it purchased seven operating landfill gas-to-RNG facilities from Morrow Renewables.
The portfolio, valued at $1.2 billion, complements recent Enbridge moves to grow North American volumes of RNG made from food and farm waste, the company said. The Morrow facilities deliver RNG from municipal landfills in six cities in Texas and one in Arkansas. The companies said all the cities have growing populations and strong partnerships with local municipalities.
"This transaction represents a uniquely de-risked portfolio of operating and scalable RNG assets," said Enbridge CEO Greg Ebel. The facilities “will accelerate progress toward our energy transition goals.”
The facilities collect gas produced by waste decomposition in landfills. They also treat and compress RNG into pipeline-grade methane. The RNG is then blended into existing natural gas distribution and transmission networks. It is used to fuel transit fleets, power industry facilities, and heat homes and businesses. Without these facilities, Enbridge said, the gas would be released or flared.
Enbridge said all seven facilities are in operation and have long-term contracts with municipalities and offtake agreements with customers. In total, they produce about 5.0 Bcf of RNG annually.
“These assets were developed by a reputable management team that’s been in the business for more than 20 years; we look forward to working with that team towards a smooth transition,” said Caitlin Tessin, Enbridge’s vice president of strategy and market innovation.
Earlier this year, Enbridge said it would spend $1 billion in a U.S. development project with Divert Inc. to turn food waste into RNG. The investment commitment was part of a broader plan to develop facilities in major U.S. regions within 100 miles of 80% of the population, according to the companies.
Enbridge also this year has pursued acquisitions to bolster its natural gas utility operation in the Lower 48. The pipeline giant announced agreements to buy from Dominion Energy Inc. East Ohio Gas Co. and Public Service Co. of North Carolina Inc., as well as Questar Gas Co. and its Wexpro Co. affiliate.
In all, the Dominion units serve 3 million customers across 78,000 miles of pipelines with customers in Idaho, North Carolina, Ohio, Utah and Wyoming. Enbridge said it would become the largest gas utility business by volume in North America should the deals close in 2024 on a staggered basis as planned. The acquisitions, valued at $14 billion in total, would boost Enbridge’s Lower 48 customer base to 7 million.
Ebel said during the company’s earnings call last week that more U.S. deals could emerge, though he said they would likely be relatively small transactions in the near term.
“I don't see us doing any major M&A here as we bring in the three utilities in the United States and make sure that they're fully integrated with the system,” he said. “But we see a lot of stuff. And I think that's a great opportunity for us” to pursue bolt-on opportunities and “for the business units to sharpen their pencil on that front.”
