UGI to build gas pipeline for Prime data center in Pennsylvania

SEATTLE (Oil Monster): UGI Corporation (NYSE:UGI) announced Wednesday a partnership with Prime Data Centers to develop natural gas infrastructure in northern Pennsylvania to support a planned artificial intelligence and high-performance computing facility.

Under a purchase and sale agreement, UGI Energy Services will sell Prime property to build a proposed on-site gas-fueled electric generation facility, according to a press release statement. UGI will retain approximately 15 billion cubic feet of underground storage capacity and oil and gas rights associated with the property.The $7.6 billion energy company trades at a P/E ratio of 13.01 and offers investors a 4.26% dividend yield.

Prime’s natural gas demand is expected to exceed 100,000 dekatherms per day within three to five years. UGI Energy Services anticipates an investment exceeding $100 million in the project.

"This is a significant milestone for UGI Energy Services and a strong fit for our midstream capabilities, where we anticipate that our planned investment could be in excess of $100 million," said Joseph Hartz, President of UGI Energy Services.

Nicholas Laag, Chief Executive Officer of Prime Data Centers, said Pennsylvania’s northern tier offers direct Marcellus Shale access and pipeline infrastructure for the development.

The project will utilize existing interstate pipeline systems, including Eastern Gas Transmission and Storage and Tennessee Gas Pipeline, as well as the UGI Utilities distribution network.

Prime Data Centers operates 13 campuses comprising 28 data centers with four gigawatts of operational and planned capacity across markets in the United States and Europe. The company was established in California in 2017.

UGI Energy Services, a subsidiary of UGI Corporation, markets natural gas, electricity, and liquid fuels to commercial, institutional, and industrial customers. The company owns and operates natural gas midstream assets including storage facilities, pipelines, and compressor stations.

In other recent news, UGI Corporation has announced a definitive agreement to sell its Electric Division to funds managed by Argo Infrastructure Partners for approximately $470 million. This transaction involves around 2,700 miles of transmission and distribution lines and 14 substations, serving over 63,000 customers in Pennsylvania’s Luzerne and Wyoming counties. The company plans to use the after-tax proceeds from the sale to reduce its debt and for general corporate purposes, aiming to strengthen its balance sheet and enhance financial flexibility. These developments mark a strategic move for UGI Corporation to focus on its core operations. The sale is expected to provide UGI with significant financial benefits. This agreement was highlighted in a press release, emphasizing the company’s intention to improve its financial standing.

Courtesy: www.investing.com