Kinder Morgan buys small-scale LNG firm Kinetrex

US energy company Kinder Morgan has agreed to acquire compatriot small-scale LNG player Kinetrex for about $310 million.

Kinder Morgan, the operator of the Elba Island liquefaction facility in Georgia, said in a statement on Friday it would buy Kinetrex from an affiliate of Parallel49 Equity.

The acquisition includes two small-scale, domestic LNG production and fueling facilities, a 50% interest in a landfill renewable natural gas (RNG) facility, and three additional RNG facilities with signed commercial arrangements, according to Kinder Morgan.

Kinetrex supplies LNG in the Midwest but it also produces and supplies RNG under long-term contracts to transportation service providers.

The firm has a 50% interest in the largest RNG facility in Indiana as well as signed commercial agreements to begin construction on three additional landfill-based RNG facilities.

Once operational next year, total annual RNG production from the four sites would reach over four billion cubic feet, according to Kinder Morgan.

Kintrex produces RNG from renewable sources, including organic waste in landfills, wastewater treatment plants and agricultural operations.

By capturing methane produced from the decomposition of organic waste, the RNG production process reduces or eliminates greenhouse gas emissions, Kinder Morgan said.

Transaction to close in the third quarter

Key members of Kinetrex’s management team will join Kinder Morgan as part of the acquisition to pursue new projects that expand their RNG platform.

After close, Kinetrex president and CEO Aaron Johnson will continue with Kinder Morgan as president of Renewable Natural Gas.

He will report to Jesse Arenivas, president of Kinder Morgan Energy Transition Ventures, a new unit of Kinder Morgan.

“We have been focused on RNG due to its potential to grow rapidly in the near term and deliver attractive returns, with landfills providing a low cost, predictable and long-term feedstock,” Arenivas said.

Kinder Morgan expects the investment to be accretive to its shareholders as the three RNG facilities become operational over the next 18 months.

The US firm says the purchase price and additional development capital expenditures represent less than six times expected 2023 Ebitda.

In addition, the transaction requires regulatory approval under Hart-Scott-Rodino.

Kinder Morgan expects the deal to close in the third quarter of 2021.

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