6 September 2023

Enbridge to buy Dominion Energy's natural gas distribution division

Enbridge, the Canadian pipeline operator, is set to acquire three energy companies from Dominion Energy in a deal worth US$14 billion. The move will create the largest natural gas supplier in North America and effectively double Enbridge's gas distribution business. Enbridge has committed to pay USD 9.4 billion in cash and assume USD 4.6 billion in debt.

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The acquisition comes at a time when US lawmakers and regulators are debating the future of natural gas. Many municipalities and urban centers are actively seeking ways to reduce its use in residential and commercial buildings. As a result, energy companies are currently evaluating strategies to modify, repurpose, or divest their natural gas distribution networks. The agreement therefore represents a significant bet that natural gas will continue to be an important transitional energy source for the foreseeable future, even as many parts of the world seek to phase out fossil fuels to combat climate change.

Enbridge currently transports approximately 30% of North American crude oil production and 20% of natural gas consumption and operates the third largest natural gas utility by number of customers, based in Canada. This transaction represents Enbridge's most significant acquisition since the purchase of Spectra Energy for approximately $28 billion in 2016.

Moreover, the Enbridge deal follows closely on a deal by Richmond, Virginia-based Dominion, which sold a $3.3 billion stake in a liquefied natural gas export project in Maryland to Berkshire Hathaway Energy nearly two months ago.