Enbridge finalizes $14 billion deal for gas utility Dominion as US energy mix shifts

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Dominion Energy, one of the US’s largest utilities, has agreed to sell its natural gas distribution business to Canadian pipeline giant Enbridge in a $14 billion deal, marking the momentous changes in North America’s fuel sector.

Enbridge will acquire Dominion’s three natural gas distribution companies for approximately $9.4 billion plus debt in an all cash deal, becoming the largest gas distribution company in North America.

The transaction is significant as it underscores two distinct investment approaches as the drive to decarbonize the US economy gathers momentum.

Best known for oil transportation, Enbridge operates the world’s longest crude oil and liquids pipeline system. After buying Dominion’s gas utilities, Enbridge’s asset mix will be split evenly between gas, renewable energy and liquids, the company said.

Dominion will need to focus on its state-regulated electric utilities at a time when electricity consumption is increasing in the United States, in part due to the shift to battery vehicles.

“Data center expansion, aided by artificial intelligence.” . . Coupled with electrification and general economic activity, they represent the strongest increase in demand in our company’s history and show no sign of abating,” said Robert Blue, CEO of Dominion.

Enbridge CEO Greg Ebel said natural gas utilities have become a “essential infrastructure for delivering safe, reliable and affordable energy.”

“The addition of natural gas utilities of this scale and quality at a historically attractive value is a unique opportunity,” he said.

Enbridge shares fell 5.8 percent in after-hours trading on Tuesday, while Dominion fell 0.2 percent.

The persistence of gas in the fuel mix has become an issue in recent transactions. Oil-specialized pipeline group Magellan Midstream Partners has specifically pointed to gas’s “more powerful growth engine” as it seeks a sale to gas-heavy Oneok.

TC Energy, the Canadian pipeline operator behind the failed plan to build the controversial Keystone XL crude oil pipeline, announced in July that it was spinning off its oil transportation business to focus on transporting gas.

Enbridge transports approximately 30 percent of the oil produced in North America and 20 percent of the gas consumed on the continent. It operates the third largest gas company by customer base, all based in Canada.

It will become the largest company after acquiring the companies involved in the deal — East Ohio Gas Company, Public Service Company of North Carolina, and Questar Gas Company — and their 3 million customers in Ohio, North Carolina, Utah, Wyoming, and Idaho become.

Dominion’s decision to sell comes as part of an ongoing business review the company initiated last year after its share price fell, in part due to rising inflation.

The Virginia-based utility has sought to free up capital by divesting “non-core” assets to improve its credit rating. Dominion recently sold its 50% interest in a Maryland liquefied natural gas terminal, Cove Point, to Warren Buffett’s Berkshire Hathaway for $3.3 billion to refine its focus on regulated power sales.

Berkshire acquired the company’s long-haul gas transmission and storage business back in 2020.