3. Identity of Joint Applicants and Other Necessary Participants in the Transactions at Issue
The Application identifies Joint Applicants as Wild Goose, EnCana, Carlyle/Riverstone Global Energy and Power Fund III, L.P. (Carlyle/Riverstone III), Carlyle/Riverstone Global Energy and Power Fund II, L.P. (Carlyle/Riverstone II), and Niska Gas Storage. Collectively, Carlyle/Riverstone III and Carlyle/Riverstone II, together with their respective co-investment funds, comprise Carlyle/Riverstone Funds.
Wild Goose, the subject of the § 854 transfer, is familiar to the Commission and needs little further introduction. An unaudited financial statement for Wild Goose, as of December 31, 2005, is Exhibit C to the Application.2 At present, Wild Goose's immediate corporate parent is Alenco, Inc., (Alenco) a wholly-owned subsidiary of EnCana. Described as "one of North America's leading natural gas producers and among the largest holders of gas and oil resource lands onshore North America," EnCana is a publicly traded corporation; its financial statement for year-end 2005 is Exhibit E to the Application. (Application, p. 7.)
Niska Gas Storage is a limited liability company incorporated in Delaware earlier this year to serve as an acquisition vehicle; it will become the immediate owner of Wild Goose post-transfer. The principal place of business for Niska Gas Storage is in New York City. The company is controlled by Niska Holdings I, L.P., which was a wholly-owned subsidiary of Carlyle/Riverstone Funds at the time the Application was filed; according to the Amendment to Application, Carlyle/Riverstone Funds now holds an 80% ownership interest in Niska Holdings I, L.P.3
Carlyle/Riverstone Funds are limited partnerships registered in Delaware in 2002 (Carlyle/Riverstone II) and in 2005 (Carlyle/Riverstone III), with a principal of business in New York City. Carlyle/Riverstone Funds are two in a series of investment funds (currently four in number) established by the joint venture between The Carlyle Group and Riverstone Holdings LLC (joint venture or Carlyle/Riverstone joint venture). The Application explains the motivation for the joint venture thus:
The joint venture was formed to capitalize on The Carlyle Group's private equity prowess and Riverstone Holding LLC's experience in the energy and power industry. The joint venture provides private equity capital for buyouts, growth capital opportunities, strategic joint ventures and leverage buildups globally in the energy and power industry. The objective of investments by the joint venture is to generate long-term capital appreciation through privately negotiated equity and equity-related investment in energy and power companies. The joint venture makes investments globally throughout the energy and power industry with primary focus on the midstream, upstream, power, and oilfield service sectors. (Application, pp 8-9.)
According to the Application, the Carlyle/Riverstone joint venture currently has approximately U.S. $5.4 billion in committed capital and has invested approximately U.S. $2.5 billion in a number of energy or power ventures in North America (the joint venture has other investments world-wide). Carlyle/Riverstone III and Carlyle/Riverstone II have committed capital of over US $4 billion between them. A financial statement for Carlyle/Riverstone III for the period from inception through December 31, 2005 is attached to the Application as Exhibit I. Exhibit K to the Application is a combined financial statement for Carlyle/Riverstone II for the years ending 2003 and 2004.4 Because of its recent formation, Niska Gas Storage has no financial statements.
Exhibit G to the Application (appended to this decision as Attachment 1) lists twelve separate investments by Carlyle/Riverstone Funds in energy and power industries located in the Western United States and elsewhere. The Amendment to Application supplements Exhibit G to add four subsequent, additional investments. (This supplement is Attachment 2 to this decision.) One of these investments is in SemGroup (described in the following paragraph), in which Carlyle/Riverstone Funds holds a 29.3% equity interest. In addition, through the separate investment in KMI by The Carlyle Group and Riverstone Holdings LLC, which we review in Section 6 of this decision, Carlyle/Riverstone III will acquire an interest in KMI's diverse energy and power businesses. The Amendment to Application also supplements Exhibit G to add a summary of these businesses. (The supplement is Attachment 3 to this decision.)
As explained in the Amendment to Application, SemGroup, L.P. and SemGroup Subsidiary Holding, L.L.C. (collectively, SemGroup), are the new, minority owners (20%) of Niska Gas Storage via a capital investment in Niska Holdings I, L.P. and Niska Holdings II, L.P. SemGroup, L.P. is an Oklahoma limited partnership; its wholly-owned subsidiary, SemGroup Subsidiary Holding, L.L.C., is a Delaware limited liability company formed to facilitate SemGroup's indirect investment in Wild Goose. Both SemGroup companies have their principal place of business in Tulsa, Oklahoma. Exhibit T to the Amendment to Application consists of SemGroup's (publicly released) condensed, consolidated financial statements as of June 30, 2006 and December 31, 2005. These statements show, for the six months ending June 30, 2006, revenues of more than US $8 billion, total assets of more than US $3.5 billion, and total partners' capital of $444 million.
SemGroup, through its subsidiaries, provides a "diversified range of midstream energy services ... primarily for the North American crude oil and refined products industry." (Amendment to Application, p. 11.) Furthermore,
Its operations include field services, gathering, processing, storage, terminaling, and marketing of crude oil, refined petroleum products, natural gas, natural gas liquids and asphalt. SemGroup serves customers primarily in the Mid-Continent and Midwestern U.S., including the states of Oklahoma, Kansas, Louisiana, Texas, and in the provinces of Alberta, British Columbia and Saskatchewan, Canada. In the U.S., SemGroup owns and operates natural gas gathering, processing and storage facilities in Kansas and New York, but provides no natural gas or natural gas products or services in the California market. (Ibid.)
Exhibit U to the Amended Application (made Attachment 4 to this decision) summarizes SemGroup's investments in the energy and power industries.
Finally, we review the organization of KMI. Again, KMI is not a party to the Wild Goose transfer, but will become affiliated through an investment by Carlyle/Riverstone III for which Joint Applicants seek separate authority under § 852. By that investment, Carlyle/Riverstone III will acquire an interest in KMI's subsidiaries and business interests, including Kinder Morgan Energy Partners, L.P. (KMEP) and its California utility subsidiaries, SFPP and CALNEV. KMI controls both the general partner of KMEP and its delegate, Kinder Morgan Management, LLC, and therefore effectively maintains indirect control of SFPP and CALNEV.
The Amendment to Application describes KMI as "one of the largest energy transportation, storage and distribution companies in North America" and states that it has, in combination with KMEP, an enterprise value of more than $35 billion5. (Amendment to Application, p. 5.) See Attachment 3 for a summary of KMI's businesses.
2 Exhibit C has been filed under seal by Administrative Law Judge (ALJ) Ruling dated October 5, 2006.
3 Footnote 32 of the Application explains that another subsidiary, Niska GS Holdings II, LP, is the parent of the Canadian gas storage facilities purchased from EnCana, including the facilities at the AECO hub in Alberta.
4 Exhibits I and K have been filed under seal by ALJ Ruling dated October 5, 2006.
5 We understand this representation to refer to US dollars.
