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Petroleum

Shell Sells CO2 Pipeline Stakes to Kinder Morgan in $185.8 Million Deal

Strategic Insights

— 1 min read

Kinder Morgan Energy Partners (KMEP) has acquired a 78% limited partner interest and 2% general partner interest in Shell CO2 from Shell Exploration & Production for $185.8 million. This transaction includes stakes in carbon dioxide (CO2) pipeline systems and CO2 source fields primarily serving the Permian Basin. The sale is part of Shell's strategy to divest low-potential onshore properties in the US in favor of deep-water Gulf of Mexico operations.

The deal makes KMEP the largest CO2 pipeline operator in North America, with ambitions to expand further. Vice Chairman Bill Morgan emphasized the company's interest in developing new markets, particularly if oil prices remain high, as CO2 injection is no longer considered a technological risk. The sale also involves the transfer of CO2 reserves in the McElmo Dome, Doe Canyon, Bravo Dome source field, and Cortez, Bravo, and Central Basin pipelines.

Key Takeaways:

  • Kinder Morgan Energy Partners (KMEP) acquires a 78% limited partner interest and 2% general partner interest in Shell CO2 for $185.8 million.
  • The sale includes stakes in carbon dioxide (CO2) pipeline systems and CO2 source fields primarily serving the Permian Basin.
  • Shell's strategy involves divesting low-potential onshore properties in the US to focus on deep-water Gulf of Mexico operations.
  • KMEP becomes the largest CO2 pipeline operator in North America with ambitions to expand further.
  • The company believes in developing new CO2 markets, particularly if oil prices remain high.
  • CO2 injection is no longer considered a technological risk, with 15 years of experience proving the process and making its results predictable.
  • KMEP is interested in exploring opportunities with Occidental Petroleum, particularly with regards to the Elk Hills oil field.

Statistics:

  • $3.6 billion (sale price of Altura Energy to Occidental Petroleum)
  • $185.8 million (purchase price of Shell CO2 stakes by KMEP)
  • 78% (limited partner interest acquired by KMEP)
  • 2% (general partner interest acquired by KMEP)
  • 20% (remaining stake in Shell CO2 owned by Shell Exploration & Production)
  • 15 years (experience gained by the industry in CO2 injection)

Sources:

  • Shell pays $3.6 billion for oil project with Occidental Petroleum, Oil Daily, March 9
  • Shell sells off more oil fields, Denver Business Journal, March 8 (accurate date not mentioned in the original)

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