Berkshire Hathaway takes stake in big CT natural gas pipeline

A natural gas compressor station in Brookfield, Conn., part of the Iroquois Gas Transmission system in which Berkshire Hathaway is acquiring a 50 percent stake from Dominion Energy.

A natural gas compressor station in Brookfield, Conn., part of the Iroquois Gas Transmission system in which Berkshire Hathaway is acquiring a 50 percent stake from Dominion Energy.

File press photo

With Berkshire Hathaway’s $9.7 billion planned acquisition of Dominion Energy’s natural gas transmission business and accompanying debt, a major pipeline in western Connecticut will be getting a new stakeholder amid continuing investment in the system.

If approved by the Federal Energy Regulatory Commission, the deal would give Berkshire Hathaway some 7,700 miles of transmission lines, along with storage facilities and a minority share in a liquefied natural gas export terminal in Maryland of which it will assume operation. It is one of just six such LNG export facilities in the United States.

The transaction includes a 50 percent stake in the Iroquois Gas Transmission System which runs nearly 50 miles through western Connecticut, and which has its main office in Shelton. Iroquois’ other major owner is TC Energy, known until last year as TransCanada, which led the design and construction of the pipeline three decades ago.

On Monday, Dominion CEO Tom Farrell II said Berkshire Hathaway expressed interest in a deal early this year, with Dominion having acquired its pipeline system via a 2000 merger with Consolidated Natural Gas. Over the weekend, Dominion and Duke Energy confirmed plans to scotch a proposed Atlantic Coast Pipeline they had hoped to build between West Virginia and North Carolina, citing legal challenges.

“To state the obvious — permitting for investment in gas transmission and storage has become increasingly litigious, uncertain and costly,” Farrell said on a Monday morning conference call. “This trend, though deeply concerning for our country’s economic growth and energy security, is the new reality which threatens the pace at which we intended to grow these assets.”

The Connecticut Public Utilities Regulatory Authority does not regulate interstate pipeline operators directly, according to Commissioner Marissa Gillett, save in cases of safety inspections in coordination with federal regulators.

“PURA ... does not have any jurisdiction to approve or disapprove the transaction between Dominion and Berkshire,” Gillett stated Monday in an email response to a query. “PURA will monitor the FERC proceeding and may intervene, if appropriate.”

New equipment for Brookfield, MilfordThe Iroquois Gas pipeline route traverses upstate New York from a station on the St. Lawrence River, entering Connecticut in Sherman and passing through portions of New Milford, Brookfield, Newtown, Monroe, Shelton, Stratford and Milford before cutting across Long Island Sound. At a Brookfield compressor station, the Iroquois pipeline bisects Enbridge’s Algonquin Gas Transmission system that runs east to the Rhode Island border.

Comprised of gaseous methane, natural gas is funneled from underground wells via “gathering” pipelines to centralized processing stations, where gas is fed into transmission pipelines. Those pipes span 20 inches to 42 inches in diameter, running underground about 70 miles to intermittent compressor stations that use turbines to pressurize the gas anew as it is forced along its journey to customers and end points.

Iroquois is seeking FERC permission to add a new building at its Brookfield facility that would house a pair of turbines to compress gas further, allowing it to quickly increase gas capacity in its Connecticut system as needed during cold snaps and other periods when demand peaks. It also plans to add equipment in Milford to cool gas as temperatures increase due to the compression process. The project would include the installation of “vent recovery” systems designed to capture emissions that would otherwise be released into the atmosphere during maintenance and inspections.

The most recent significant expansion of Connecticut’s inbound natural gas flow occurred five years ago, when new pipelines and supporting infrastructure increased capacity by 16 percent.

Power plants fired by natural gas produced half of Connecticut’s electricity as of March, according to the most recent estimates from the Energy Information Administration, with NTE planning to add to that predominance in seeking permission to build a $500 million natural gas plant in Killingly.

Dominion’s Millstone Power Station nuclear plant in Watertown produces most of Connecticut’s remaining electricity load, with the state aiming to increase its renewable generation capacity through offshore wind farms in the early stages of planning.

About 35 percent of Connecticut households use natural gas, EIA data shows, with retail suppliers including Connecticut Natural Gas and Southern Connecticut Gas, both owned by Avangrid; and Eversource Energy. Combined, the three companies had more than 600,000 Connecticut customers, with several alternative suppliers also registered with PURA to bill for natural gas on a retail basis.

Berkshire Hathaway’s existing Connecticut holdings include the Wallingford-based real estate agency Berkshire Hathaway HomeServices New England Properties, as well as General Reinsurance and another reinsurance division based in Stamford; Duracell which has its main research facility in Bethel; and H.H. Brown Shoe based in Greenwich. Other household names pepper Berkshire Hathaway’s list of operating companies including Benjamin Moore, Fruit of the Loom, Geico and Oriental Trading.

Berkshire Hathaway Energy is based in Des Moines, Iowa, and has one natural gas facility in the Northeast in the Saranac power plant in Plattsburgh, N.Y.

The Dominion deal comes a week after Oklahoma City-based Chesapeake Energy declared bankruptcy, with $11.8 billion in debt against assets of $16.2 billion and coming off an $8.3 billion loss in the first three months of this year that left it with $82 million in cash entering April.

Chesapeake Energy is credited as a pioneer in the process of hydraulic fracturing or fracking, a process by which a sandy slurry is pumped into underground wells to fracture the walls and tease out additional oil or gas. Last week, Covia filed for bankruptcy as well, with the company created in the 2016 merger of an Ohio company with Unimin, based at the time in New Canaan.

Includes prior reporting by Luther Turmelle.; 203-842-2545; @casoulman