Kinder Morgan Energy Partners LP, the second-largest U.S. pipeline partnership, agreed to sell assets in the Rocky Mountains to private-equity backed Tallgrass Energy Partners LP for $1.8 billion in cash, a divestiture promised to antitrust regulators.
Kinder Morgan Energy will sell 7,200 miles of pipelines and two natural-gas processing facilities, the Houston-based company said Monday.
The deal, which includes its Trailblazer Pipeline Co., Kinder Morgan Interstate Gas Transmission pipeline and a 50 percent interest in the Rockies Express pipeline, is valued at $3.3 billion including assumed debt, according to the statement.
The sale is the last requirement from Kinder Morgan Inc.’s $22.8 billion takeover of El Paso Corp. in May. The Federal Trade Commission forced Kinder Morgan, which controls Kinder Morgan Energy, to sell some of its gas pipelines to reduce its dominance in the Rocky Mountain region.
Kinder Morgan Energy fell 0.4 percent to $82.23 at the close in New York. Kinder Morgan Inc. gained 1.9 percent to $34.86.
Tallgrass, based in Overland Park, Kan., is owned by its management, as well as private-equity firm Kelso & Co. and a group of investors led by the Energy & Minerals Group.
Tallgrass will continue with Kinder Morgan’s plan to convert the Pony Express pipeline to ship oil, with a target date in the first half of 2014. The company plans to retain Kinder’s employees.
The buyer will also explore “promising growth plans on the east end of the Rockies Express,” according to the statement.
The 1,679-mile Rockies Express pipeline was designed to bring gas from Colorado and Wyoming to markets in the U.S. Northeast. After the last section opened in 2009, output from the Marcellus Shale in the eastern U.S. began to replace production from the Rockies, making the line less valuable.
