Warren Buffett's Berkshire Hathaway's energy arm will buy gas assets owned and operated by the Dominion Energy power group in a close to $10 billion contract, the two companies disclosed on Sunday.
For years, Dominion has worked to extend its pipelines along the Atlantic Coast to benefit from the country's fracking growth. The Virginia-headquartered company, however, is withdrawing from those plans after a series of regulatory issues, and handing over control of the group's natural gas and reserve infrastructure to Berkshire Hathaway.
Dominion has over 7 million energy clients spread over 20 US states. Berkshire Hathaway Energy delivers power to 12 million consumers worldwide.
The power group is allocating $4 billion to acquire the natural gas transmission and storage properties of Dominion Energy. With the inclusion of a debt assumption, the agreement would be worth nearly $10 billion, marking the first major buyout of Berkshire since the global health crisis and the ensuring market turmoil in March.
During his annual stakeholders' meeting in May, Buffett divulged that Berkshire had raked in a record $137 billion cash gain as the financial market fell and that he had not witnessed many positive deals, despite the financial market's deep swoon.
For Dominion, the multi-billion dollar contract is among a host of decisions the group has made as it shifts from the gas transmission business to becoming a regulated renewable energy utility firm.
According to Dominion chief executive officer Thomas Farrell, they plan to shell out around $55 billion in carbon emission technology in the next 15 years. The technology will focus on zero-carbon emission and power storage, gas distribution link replacement, and renewable natural gas, Farrell said.
Berkshire Hathaway will acquire more than 7,700 miles of natural gas pipelines from Dominion, including its 100% interest in Dominion Energy Transmission, the Questar Pipeline, and Carolina Gas Transmission, as well as its 50% stake in the Iroquois Gas Transmission System.
Berkshire will also purchase 900 billion cubic feet of natural gas storage assets from Dominion as well as a 25% stake in the Cove Point LNG facility, which is one of six currently operating LNG export terminals in the country.
Berkshire Hathaway will buy over 7,700 miles of natural gas lines from Dominion, which includes a 100 percent interest in Dominion Energy Transmission, Carolina Gas Transmission, Questar Pipeline.
It also includes a 50 percent share in the Iroquois Gas Transmission System. Berkshire will also acquire 900 billion cubic feet of natural gas storage properties from Dominion including a 25 percent share in the Cove Point LNG facility.
