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SK Holdings invests W170b to US natural gas business

March 28, 2019 - 14:56 By Lim Jeong-yeo
SK Holdings announced Thursday that it will invest 170 billion won ($150 million) to Blue Racer Midstream, a US natural gas gathering and processing business.

In 2017, SK Holdings made a $1 billion investment in Eureka Midstream Holdings, another US gas company.

Both Blue Racer Midstream and Eureka Midstream Holdings have offices in Pennsylvania and Ohio in the Marcellus-Utica Basin, which is the largest natural gas reserve in North America.

Major pipeline constructions began in the region last year, posing promising returns from the area. Industry outlook for the natural gas output from the Marcellus-Utica Basin between 2018 and 2025 is approximately 880 million tons, which is expected to account for nearly half of the entire North American production during the period of 1.8 billion tons. 

Image captured from Blue Racer Midstream's website

A gathering and processing business is a company dealing in the “midstream” part of the energy value chain. The energy value chain can be cut down into three segments: the upstream, where exploration and production take place, the midstream, where logistics and processing occur, and the downstream, where consumption happens.

Blue Racer Midstream does the natural gas gathering, compression, treating, processing and transportation. Blue Racer Midstream, established in 2012, is a leading gathering and processing firm in the region, with 1,100 kilometers in pipelines and the facilities to process 7.3 million tons of natural gas a year. The firm’s operating profitability as a percentage of its total revenue is 80 percent, meaning the company has a track record of high earnings.

Image captured from Blue Racer Midstream's website

SK Holdings said through a press release it had been strategically selected as a joint investment partner by private equity fund First Reserve.

In addition to SK Holdings and First Reserve, securities brokerage company Mirae Asset Daewoo and Samsung Securities also have decided to invest an additional $150 million in total in Blue Racer Midstream.

By Lim Jeong-yeo (