Caliche Development Partners II to buy underground gas storage assets in Texas, California

Chris Mathews | December 1, 2022 (Houston Business Journal) – With new capital commitments,Houston-based Caliche Development Partners is expanding its underground storage platform with deals in Texas and California.

Caliche Development Partners II has formed a partnership aimed atdeveloping underground storage and sequestration assets in North America with capital commitments from Orion Infrastructure Capital and GCM Grosvenor (Nasdaq: GCMG).

Along with the new capital, the partnership also acquired Golden Triangle Storage Inc., an underground natural gas storage facility at the Spindletop salt dome in Jefferson County, Texas.

Caliche Development Partners said it also anticipates acquiring Central Valley Gas Storage in Colusa County, California, from affiliates of Atlanta-based Southern Co. (NYSE: SO).

Caliche management, Orion and GCM Grosvenor expect to pay acollective total of $186 million for the underground storage assets,the partners said Nov. 29. The GTS deal closed Nov. 18; the CVGS deal is expected to close in 2023, pending state regulatory approvals.

"The support of our repeat and new capital partners combined with the location of these two acquisitions, and their exceptional operational teams, provide Caliche a platform to significantly impact the energy transition on the U.S. Gulf and West Coasts," said Caliche II CEO Dave Marchese.

The Caliche management team has experience with underground storage facilities at the Spindletop salt dome, where the U.S. oilboom took off over a century ago. Caliche's first iteration developed and operated storage caverns for ethylene and heliumin Beaumont.

The helium salt cavern, which finished construction in mid-2021,was the first of its type built in the U.S. and the second ever built world wide, Caliche said.

Energy Spectrum Capital backed Caliche’s development of the saltdome into hydrocarbon and gas storage with an investment of at least $200 million. Orion previously backed Caliche with a $150 million investment in late 2020.

In March, Caliche closed on the sale of its NGLs storage business in Beaumont, Coastal Caverns, in a deal with Dallas-based mid stream giant Energy Transfer LP (NYSE: ET).

With Caliche Development Partners II, the firm's management team also aims to apply its underground storage expertise to storing hydrogen and carbon dioxide.

"Natural gas storage will continue to play an important role in our energy mix while providing the assets and knowledge to storing helium, hydrogen and CO2 in similar formations," Marchese said.