This week, natural gas pipeline operator MarkWest Energy Partners LP (MWE) completed the sale of its under-construction hydrogen facility in Texas to Air Products and Chemicals Inc. (APD), a leading global hydrogen provider.
Air Products agreed to pay approximately $73.1 million for the steam methane reformer (SMR) hydrogen facility currently being constructed at MarkWest’s Javelina processing facility in Corpus Christi, Texas. As per the terms of the deal, Air Products will complete the construction of the SMR, which is expected to start operations in March 2010.
In addition to the purchase and sale agreement, the companies entered into a long-term supply contract whereby Air Products will provide hydrogen and steam to MarkWest. MarkWest will take hydrogen produced by the SMR facility (expected to be over 30 million cubic feet per day), combine it with the partnership’s existing production capabilities at the Javelina plant and then deliver high-purity hydrogen to local refinery customers.
MarkWest intends to use the sale proceeds to repay the amounts outstanding under its revolving credit facility and to support growth capital projects. We believe that the transaction will not only improve the partnership’s financial position but also help it to maintain current distribution levels.
Denver, CO-based MarkWest Energy Partners LP, a master limited partnership (MLP), is engaged in the gathering, processing and transmission of natural gas, transportation, fractionation and storage of natural gas liquids (NGLs), and the gathering and transportation of crude oil. The partnership is one of the largest processors of natural gas in the Appalachian region and has a significant presence in the other prolific natural gas producing basins of the U.S. MarkWest’s customers include major oil and gas companies, large and small independent energy companies, and oil refineries.
We currently rate MarkWest units as Neutral.
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