Former Copano execs get $500M to start new pipeline firm

HOUSTON — The executives who sold Copano Energy to Richard Kinder’s pipeline empire for $3.2 billion last year have lined up $500 million to start a new midstream oil and gas  company.

The Woodlands-based Navitas Midstream Partners is planning to build gathering pipelines, processing and treatment facilities in North America, CEO Bruce Northcutt said in an interview with FuelFix on Monday. It’s among a number of private equity and midstream firms seeking to converge on a gap in infrastructure between emerging shale plays and U.S. markets.

“You see a lot of players in the midstream place, and part of that is the replumbing of America,” said Northcutt, former president and CEO of Copano Energy.

Northcutt added that young shale plays like the Marcellus Shale in Pennsylvania are forcing the industry to make a U-turn in the flow of oil and gas from eastward to westward.

“There are a variety of different expansions and debottlenecks that need to occur,” Northcutt said. “There’s a lot of opportunity to do that.”

Navitas is planning on using its $500 million investment from New York private equity firm Warburg Pincus to snap up assets and then build organically, though it’s too early to say where the company will invest in North America, Northcutt said.

But opportunities abound. In North Dakota’s Bakken Shale, for instance, there’s a bigger need for infrastructure as regulators clamp down on gas flaring, he said.

“They’re lacking in takeaway capacity to handle large amounts” of crude, he said. “I think the industry is playing catch up.”

In Northcutt’s tenure as CEO from 2010 to 2013, Houston-based Copano had built nearly $1 billion in gathering, processing, fractionation, natural-gas-liquids transportation and other assets in the Eagle Ford. It sold to Kinder Morgan last May for $5 billion, including $1.8 billion in debt.

Two other top managers of Copano joined Northcutt at Navitas. Put together, the three have built more than $10 billion in assets over their careers.

Northcutt’s latest investor, the $37 billion-asset Warburg Pincus, has pumped $9.5 billion into the energy sector in more than 50 separate deals, and has brought several companies to market including Tulsa, Okla.-based Laredo Petroleum and Houston-based Targa Resources.

Both midstream firm and private equity backer, Northcutt said, are taking the long view of North America, and are not planning to be overly hasty in selling their assets. It’ll be more about organic growth than purchasing assets, he said.

It’s likely the most active market for private equity that Northcutt has seen in his career, meaning there are also many more competitors on the field, he said.

“It’s a sign that there’s a lot of opportunity, and there’s lots of infrastructure that needs to be built,” he said.