Dominion Energy to sell Questar Pipeline to Southwest Gas for $1.9B

Deal to sell Questar subsidiary to Berkshire Hathaway fell through in July

Published October 5, 2021 by Robyn Sidersky

Richmond-based Dominion Energy Inc. has reached an agreement to sell its Questar Pipeline subsidiary to Las Vegas-based Southwest Gas Holdings Inc. for $1.975 billion, the Fortune 500 utility announced Tuesday.

The all-cash deal includes the assumption of $430 million of debt. The transaction is expected to close in the fourth quarter.

Questar Pipeline is an interstate natural gas pipeline business that provides natural gas transportation and underground storage services in Utah, Wyoming and Colorado. The company owns and operates 1,867 miles of natural gas pipeline. It transports gas for delivery to markets in the West and Midwest, including southern Idaho.

Southwest Gas Holdings Inc. provides natural gas service to more than 2 million customers in Arizona, Nevada and portions of California.

“We are pleased with the result of our sale process for these high-quality assets,” Dominion Chair, President and CEO Robert M. Blue said in a statement. “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 development of the largest offshore wind farm in North America. 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.”

Dominion began divesting its natural gas holdings in November 2020, when the utility sold the majority of its gas transmission and storage assets to Berkshire Hathaway Energy for approximately $2.7 billion in cash. In July 2020, Dominion’s then-CEO, Thomas F. Farrell II, who died in April, said that the company was taking the action as part of a “narrowing of focus,” repositioning Dominion strategically with a pure-play focus on its “state-regulated, sustainability-focused utilities” business.

The Questar Pipeline sale was originally part of the Berkshire Hathaway deal, but that portion of the transaction was terminated in July. Dominion chalked up the termination decision to ongoing uncertainty associated with achieving clearance from the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Proceeds from the Questar Pipelines sale will be used to reduce parent-level debt, including retiring a 364-day term loan Dominion entered into in July, which Dominion used to repay a $1.3 billion transaction deposit made by Berkshire Hathaway Energy, according to a news release from Dominion.

Questar sale proceeds will also support Dominion’s capital plan of decarbonization. Dominion is facing a state mandate to produce all of its electricity for Virginia customers from zero-carbon renewable energy sources by 2045. As part of that effort, Doinion is building a 180-turbine offshore wind farm 27 miles off the coast of Virginia Beach.

In July 2020, Dominion and Duke Energy Corp. abandoned plans first announced in 2014 to build the controversial interstate Atlantic Coast Pipeline, which would have been 600 miles long and cost $8 billion. The natural gas pipeline, which would have run from West Virginia through Virginia into eastern North Carolina, was supposed to go into operation in 2019, but was delayed by legal proceedings and opposition from environmental groups. Before Dominion and Duke announced the cancelation, the U.S. Supreme Court handed down a ruling that would have allowed the pipeline to cross under the Appalachian Trail.

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