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SALT LAKE CITY — Dominion Energy has agreed to sell its Questar natural gas pipeline in the three western states, including Utah, to Southwest Gas Holdings in a deal worth more than $1.9 billion in cash and debt, the two companies announced Tuesday.
Under the terms, Las Vegas-based Southwest Gas agreed to pay $1.545 billion in cash and take on $430 million in debt related to the Questar Pipeline. It's expected to be finalized by the end of the year but needs federal approval under the Hart-Scott-Rodino Antitrust Improvements Act first, said Dominion spokesman Ryan Frazier.
The Richmond, Virginia-based Dominion Energy acquired Questar Corp. — Utah's largest natural gas supplier — in a $4.4 billion deal back in 2016. The pipeline consists of over 2,000 miles of pipelines and underground storage assets within Utah, Colorado and Wyoming, according to the company.
Dominion assumed control of Questar's natural gas services after the 2016 deal. Frazier told KSL.com Wednesday that this week's pipeline deal won't impact service for most customers in Utah.
"It does not affect the utilities," he said of the deal. "It's just the interstate pipeline system and (other assets)."
The pipeline will operate as a stand-alone subsidiary of Southwest Gas Holdings once the deal is complete. Frazier added there are about 240 employees impacted by the sale; however, he wasn't sure what the sale would mean for their job status. KSL.com reached out to Southwest Gas Wednesday but did not get a response by publication time.
This isn't the first time Dominion has tried to sell the Questar Pipeline since acquiring it. It had agreed to sell the pipeline to Berkshire Hathaway Energy last year but the deal fell through and the two companies agreed to terminate the sale in July.
The deal with Southwest Gas made headlines in the business world when billionaire investor Carl Icahn announced he had purchased shares in Southwest Gas and urged the company to not go forward with the deal, CNBC reported Tuesday. The two companies announced the agreement shortly after anyway.
"The acquisition of Questar Pipeline is a milestone moment for the company that we believe will provide significant financial and strategic benefits to our company, shareholders, employees and partners, as we continue to significantly increase our role in the transitioning energy landscape," said Southwest Gas Holdings' President and CEO John Hester, in a statement Tuesday.
Dominion officials, in a statement Tuesday, said proceeds of the sale will be used to "reduce parent-level debt, including retiring the 364-day term loan that was entered into in July, which Dominion Energy previously used to repay the approximately $1.3 billion transaction deposit made by Berkshire Hathaway Energy" and to support the company's capital plan.
"This transaction represents another significant step in our evolution as a company, allowing us to focus even more on fulfilling the energy needs of our utility customers and continuing growth of our clean-energy portfolio, including the development of the largest offshore wind farm in North America," said Robert Blue, the chairman, president and CEO of Dominion Energy, in a statement. "We appreciate the focus and professionalism of the Questar Pipelines employees, who have maintained safe and reliable operations. We look forward to closure by year's end."