NiSource Inc. (ticker: NI) said yesterday it will file a registration statement for an IPO of common units for a new MLP whose assets will consist of a 14.6% interest in CPG OpCo LP, which will own the natural gas transmission, midstream and storage assets of NiSource.
NiSource, through its wholly owned subsidiary Columbia Energy Group, will own the general partner of the MLP, all of its incentive distribution rights, and a majority of its limited partner interests following completion of the initial public offering. NiSource and its operating companies deliver energy to 3.8 million customers from the Gulf Coast through the Midwest to New England.
The NiSource spinoff provides the ability to raise capital to expand pipeline networks. Constraints on pipeline and other gas transmission infrastructure has created problems for producers of oil and gas, especially in the fastest growing basins, such as the Marcellus shale and the Bakken. NiSource has announced plans to spend about $8 billion to $10 billion over the next five to 10 years to expand and upgrade pipelines serving the Marcellus and Utica shale formations. Columbia Energy Group recently employed the services of GE and Accenture to increase the efficiency of pipeline downtime. That technology will make its debut on 15,000 miles of pipe in the Marcellus this winter.
According to data compiled by Bloomberg, more than 280 pipeline partnerships have gone public in the past decade, raising about $81 billion from initial offerings. MLPs pay no federal income tax, allowing them to send more profits to investors. The Alerian MLP Index is a group of 50 such partnerships. It “has gained 13 percent this year, almost twice the growth of the Standard & Poor’s 500 Index,” Bloomberg reported.
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