In February 2016, Dominion Resources announced the acquisition of Questar Corporation for $4.4 billion. Richmond, Virginia-based Dominion operates electric utilities in Virginia and North Carolina, local gas distribution companies (LDCs) in Ohio and West Virginia, and electric transmission and electric generation businesses. Dominion also is the general partner and majority owner of Dominion Midstream, a master limited partnership with storage assets and gas pipelines on the East Coast. Based in Salt Lake City, Utah, Questar is a natural gas distribution, pipeline, storage, and cost-of-service gas supply company that serves nearly one million homes and businesses in Utah, Wyoming, and Idaho. Questar also owns about 3,400 miles of gas transmission pipeline and 56 billion cubic feet of working gas storage.
The Dominion-Questar deal is the third major acquisition involving a natural gas company in about seven months (Duke Energy-Piedmont Gas and Southern Company-AGL Resources were announced during the second half of 2015). Similar to the previous deals, the Questar acquisition is expected to provide scale, geographic diversification, and growth opportunities. However, financial analysts say that this deal is somewhat different because midstream assets (i.e., Questar’s pipeline), rather than the utility businesses, are the primary driver. Also, Dominion’s proposed geographic expansion is greater than what Duke and Southern would achieve with their acquisitions.
This report is part of the Gas Minute series. To view all featured Minutes, please click here.
Sussex Economic Advisors is now part of ScottMadden. We invite you to learn more about our expanded firm. Please use the Contact Us form to request additional information.