Caliche acquires Southern Co.gas storage assets

Houston – November 29, 2022 - Caliche Development Partners II has agreed to acquire two natural gasstorage assets from affiliates of Southern Co. for approximately $186million to support the energy transition in North America.

Houston-based Caliche has partnered with OIC (formerly Orion EnergyPartners) and GCM Grosvenor on the acquisition of Golden TriangleStorage, Inc. (GTS) a salt dome formation in Beaumont, Texas; and on theanticipated acquisition of Central Valley Gas Storage, a sandstoneformation in Colusa county, Calif.

The partnership is targeting underground storage in North America toaddress energy security and to support intermittent demand for naturalgas resulting from the growth of renewables, Dave Marchese, ceo ofCaliche II, said in an interview with PeakLoad.

In addition, the deal positions Caliche II to expand into hydrogen storage,where its familiarity with potential customers and salt cavern formations istransferable. Caliche II’s technical team and knowledge also puts thecompany a step closer to underground carbon sequestration in nearbysandstone formations, he added.

“We like these assets as a place to expand into energy transition”,Marchese said, noting gas storage’s a 24-hour operations, allowing Calicheto focus on safety and monitoring.

The acquisition includes approximately 10 employees at Golden TriangleStorage and eight at Central Valley Storage.

The Golden Triangle Storage transaction closed on Nov. 18, and theCentral Valley Gas Storage purchase, which requires state regulatoryapprovals, is expected to close in the second half of 2023.

OIC’s capital commitment is the firm’s second investment with the Calichemanagement team.

“We are thrilled to partner with the Caliche team again and with GCMGrosvenor to build off the success of Caliche I,” Ethan Shoemaker,investment partner and head of infra credit at OIC, said in a statement.

“GTS and CVGS are both premier storage assets and provide criticalinfrastructure for reliability in their respective markets.

We look forward tosupporting Caliche II’s continued growth as we expand the platform forother customers and into new products”, he added.

“We believe the investment opportunity for underground storage is robustin light of market dynamics and ongoing energy transition initiatives acrossthe globe,” Matthew Rinklin, managing director at GCM Grosvenor,commented.

“The Caliche team has a proven track record of developing critical storageinfrastructure for a range of customers across fuel types, and we lookforward to growing their platform alongside our partners at OIC”, Rinklin noted.

“The support of our repeat and new capital partners combined with thelocation of these two acquisitions, and their exceptional operational teams,provide Caliche a platform to significantly impact the energy transition onthe U.S. Gulf and West Coasts”, Caliche II’s Marchese added.

The Golden Triangle and Central Valley gas storage assets were previouslyowned by AGL Resources, which Southern Co. acquired in 2015.

A spokesman for Southern declined comment.

Caliche previously operated on the Spindletop salt dome, where theGolden Triangle Storage facility is located.

Earlier this year, Caliche sold its Coastal Caverns business to EnergyTransfer.

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