Tallgrass buys Ruby Pipeline in bankruptcy auction

Private pipeline operator Tallgrass Energy LP was the winner Dec. 16 of a bankruptcy auction for the 1.5 Bcf/d, 683-mile Ruby Pipeline LLC with a successful bid of $282.5 million, according to Tallgrass and bankruptcy court filings.

Tallgrass said the purchase of the line that runs from Opal, Wyo., to Malin, Ore., will immediately add to its cash flows and expand Tallgrass' service to West Coast markets.

Ruby filed for bankruptcy protection in March, after which the Kinder Morgan Inc. affiliate missed a $475 million bond payment due April 1. The filing was no surprise to the credit community, which had been steadily downgrading Ruby's credit since major customer PG&E Corp.'s 2019 bankruptcy.

The U.S. Bankruptcy Court of the District of Delaware (Case No. 22-10278) in Wilmington, Del., set a Dec. 19 hearing date to approve the bid. Tallgrass expects to close the deal in the first quarter of 2023.

"In addition to gaining new teammates, this acquisition further advances our track record of optimizing existing infrastructure to lead energy solutions," Tallgrass President and CEO Matt Sheehy said in a statement. In addition to serving West Coast markets, Tallgrass said the acquisition would add to its efforts to expand deliveries of certified low-carbon gas and renewable natural gas to customers.

Specifically, Tallgrass MLP Operations LLC is buying the pipeline from Kinder Morgan's EP Ruby LLC through the bankruptcy court's auction. EP Ruby was the "stalking horse" bidder, setting the minimum sale price at $276 million.

Ruby's Chapter 11 filing said the gas pipeline connecting the Rocky Mountain hub in Opal to the West Coast had assets and liabilities of between $500,000 and $1 billion. Its largest creditors are the holders of a 6% $475 million senior unsecured bond, according to court filings.

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