The companies will each own a 50% interest in the new venture, which will be operated by El Paso.
Under the agreement, KKR will acquire a 50% interest in El Paso’s Altamont gathering and processing assets in Utah for $125m, which include about 800 miles of pipelines, 3,800 barrels per day of fractionation capacity and 40 million cubic feet per day of natural gas processing capacity.
The Altamont field is one of El Paso’s core oil programs and El Paso expects to increase its drilling activity from a current two-rig program to three rigs in 2011 and six rigs by 2013.
The partnership expects that there will be opportunities to expand the Altamont midstream assets given El Paso’s and others’ drilling plans.
In addition, KKR and El Paso will each invest up to approximately $500m in future midstream projects including, but not limited to, the Marcellus Ethane Pipeline System (MEPS) in the Marcellus shale and the Camino Real Pipeline in the Eagle Ford shale.
El Paso previously announced that it is partnering with Spectra Energy to develop the MEPS project and expects to have a partner for the Camino Real Pipeline project.
