Oil & Gas UK Breakfast Briefing; Developing an Independent Midstream Infrastructure Business. 11 th May 2016 Andy Heppel, CEO

Transcription

1 Oil & Gas UK Breakfast Briefing; Developing an Independent Midstream Infrastructure Business 11 th May 2016 Andy Heppel, CEO

2 Introduction to NSMP North Sea Midstream Partners Ltd Formed by ArcLight Capital in Dec 2012 through the acquisition of the Teesside Gas Processing Plant ( TGPP ) Recent acquisition of package of operated assets from TOTAL ArcLight Capital Energy only (upstream, midstream, power) US private equity investor $13bn of private equity capital invested since 2001 Significant oil and gas midstream investments including onshore and offshore Ownership/operating model High quality, focussed operating model hence operatorship and substantial equity position needed Commercial approach Aim is to create value for upstream resource owners and NSMP Allow field owners to focus resources (capital and human) on E&P activities 2

3 Assets - TGPP First independently owned gas processing plant in UK operational since mmscfd capacity, 2 trains Serves two pipelines Antin s CATS (CNS) and Ineos's Breagh (SNS) Process gas from several of the largest recent developments in the UKCS with total capex > 3bn (Jasmine, Breagh, Andrew redevelopment and Stella/Harrier) World class operational performance (SHE & availability) Highly experienced operator (px Limited, PX ) TGPP CATS BREAGH 3

4 Assets - St Fergus/FUKA/SIRGES SFGT - processing capacity of c. 1,200 mmscfd (ex Vesterled) FUKA - 362km, 32 pipeline (100%) SIRGES - 234km, 30 pipeline (67% op) FUKA serves fields in the Northern North Sea and in future the Norwegian Continental Shelf (Martin Linge) SIRGES serves West of Shetlands recent SGP & Laggan/Tormore start up NSMP replaced TOTAL as owner and operator on 15th March 2016 PX provide operating and maintenance services under long term O&MA 4

5 Evolution of Independent Midstream Sector Independent midstream sector well established in North America emerging theme in Europe In the UK (all operated); 5 12/12 NSMP (ArcLight Capital) acquired TGPP 6/14 Antin Infrastructure acquired BG s 63% in CATS 4/15 Antin Infrastructure agreed to acquire BP s 36% operated interest in CATS 8/15 NSMP agreed to acquire TOTAL s 100% interests in FUKA and St Fergus and 67% interest in SIRGES In the Dutch sector (all non-op); 9/13 Dutch pension PGGM acquired 33% of NOGAT GDF Suez 11/13 Danish pension PensionDanmark acquired 40% of NGT from TAQA 11/14 InfraVia acquired 20% of NGT from GDF Suez In the Norwegian sector; 46% of Gassled now owned by Solveig Gas, Njord Gas Infrastructure, Allianz and Infragas Source: BG NSMP Antin CATS

6 Emerging Themes Range of financial investors pension funds, infra funds and private equity different sources and costs of capital All seeking diverse and stable cash flows varying appetite for risk but all infrastructure owners do take on field/reservoir risk All deals so far on long life assets with substantial existing and future volumes decommissioning still a long way off Not all investors are prepared to or want to operate in UK those who do operate so far using 3rd party specialist O&M companies (e.g. Wood Group, PX) Source: PX 6

7 Why Independent Midstream? Wood Review supportive of independent owner/operator model; Removes potential COI between reserves and infrastructure owner Equitable allocation of capacity/uptime Facilitates third party access to infrastructure OGA talks of right assets, right hands Focus All business is third party business Not competing for human or financial capital within a larger E&P business Invest to improve assets/extend life Lower overheads Access to capital Different sources of capital (equity and debt) than typical E&P/integrated business 7

8 Numerous challenges Asset and transaction complexity Often deeply integrated within an existing E&P business People Many staff have been with these assets and major companies for many years Pensions always a key concern, but now a more established process in the UK Decommissioning Key issue in many potential North Sea deals - the midstream is no exception Source: Decom North Sea Approvals/Regulatory Extensive approvals required including DECC, HSE, OGA, EA, customers, JV partners etc Macro environment Current commodity price uncertainty Reduced drilling, project developments etc Source: Penspen 8

9 and opportunities Focus NSMP s only business is the transportation and processing of our customers hydrocarbons Dedicated resource not involved in production, exploration, projects etc Cost Long term TGPP operation benchmarked to have best in class opex Already identifying opportunities at St Fergus to do things differently Innovation/Flexibility Looking for ways to continually improve the services offered Develop win-win, fit for purpose commercial solutions, attract new business Many improvements can be made with small, incremental projects 9

10 The future? Many potential drivers for independent ownership of the midstream Growing acceptance that even core assets do not have to be owned Here to stay Expect to see more UK midstream deals Also expect to see independent funding models emerging for greenfield infrastructure NSMP Huge focus (with our operator PX) on the safe and efficient operation of TGPP and the newly acquired SFGT, FUKA and SIRGES Looking to grow further with backing from ArcLight Capital and supportive banks Greenfield/newbuild as well as existing assets Source: LLOG 10

11 11 THANK YOU!