Caiman, Dominion team up for $1.5 billion venture
Dominion Resources Inc., owner of Virginia’s largest utility, and closely held Caiman Energy II LLC of Dallas announced a $1.5 billion joint venture Thursday to provide pipelines and processing to natural gas producers in the Utica Shale of Ohio and Pennsylvania.
Blue Racer Midstream LLC will be an equal partnership between the two, with Dominion providing assets and Caiman contributing capital. Williams Partners LP, holder of a 48 percent stake in Caiman, said it will spend $380 million through 2014 on the projects.
The venture combines Caiman’s and Dominion’s previously announced plans to collect raw gas and extract valuable liquids such as ethane and propane produced from drilling in the Utica. Producers aim to replicate the shale-oil bonanzas of North Dakota’s Bakken formation and the Eagle Ford shale of Texas.
“The joint venture allows Dominion to capture the value of our assets in the Utica region,” Dominion chairman and CEO Thomas Farrell said in the statement.
For producers, the joint venture will provide “a smooth line from the wellhead to sales,” Caiman CEO Jack Lafield said in an interview.
“You can sit down with a producer and he knows the fees he’s paying, and the method of getting it from his well to the cash register is well-defined,” Lafield said.
Williams Partners, controlled by Tulsa, Okla.-based pipeline operator Williams Cos., agreed to invest as much as $800 million in Caiman Energy II LLC in July, joining private equity firms EnCap Flatrock Midstream of San Antonio and Highstar Capital of New York.
The joint venture may look to ship gas liquids out of Ohio on a long-haul pipeline that Williams is developing, Lafield said.