Southern Company's Natgas Pipeline Acquisition Pays Off in 2016

Researched by Industrial Info Resources (Sugar Land, Texas)--Southern Company (NYSE:SO) (Atlanta, Georgia) benefited from solid retail revenues and a string of acquisitions in 2016, although it had to overcome higher operational and maintenance costs, as well as weak performances in Southern's regional electric subsidiaries. Most of Southern's revenue gains in the fourth quarter came from Southern Natural Gas Company LLC, its new natural gas pipeline partnership with Kinder Morgan (NYSE:KMI). Industrial Info is tracking nearly $30 billion in active projects involving Southern, as well as $4.14 billion in projects involving Southern Natural Gas Company LLC.

The Southern Natural Gas pipeline system brought in $1.6 billion in sales for the year. Last July, Southern bought a 50% equity interest in the system, which Kinder Morgan continues to operate. The 7,600-mile pipeline system connects natural gas supply basins in Texas, Louisiana, Mississippi, Alabama and the Gulf of Mexico to markets in Louisiana, Mississippi, Alabama, Florida, Georgia, South Carolina and Tennessee.

Industrial Info is keeping tabs on one of Southern Natural Gas Company's most anticipated projects: the $2.5 billion Elba Island liquefied natural gas (LNG) terminal in Savannah, Georgia. Earlier this month, Southern LNG Incorporated, a subsidiary of Kinder Morgan, began construction on the project, for which Southern Natural Gas Company is serving as project director. The plant will have 10 modular production units with a total output of 2.5 million metric tons per year of liquefied natural gas (LNG). The units are expected to be brought online from mid-2018 through early 2019. A $50 million natural gas pretreatment unit also is under construction. For more information, see Industrial Info's project report on the LNG terminal and the pretreatment unit.

Southern LNG and Southern Natural Gas Company also are in the preliminary engineering stages for a $1.5 billion addition of a second train at Elba Island, which is designed to have four modular production units with a total output of 1.5 million metric tons per year of LNG. For more information, see Industrial Info's project report.

Industrial Info also is tracking projects at Southern Company's two largest power projects under construction: the $16.2 billion addition of two units at Alvin Vogtle Nuclear Power Station in Waynesboro, Georgia, and the $6.95 billion Kemper County TRIGCC Power Station in De Kalb, Mississippi. For more information, see Industrial Info's project reports on the Vogtle Station and the Kemper County Station, and January 5, 2017, article - Georgia Power Hit with Financial Penalties for Construction Delays at Vogtle Nuclear Plants.

The company also benefited from its growing portfolio of renewable energy projects at wholesale subsidiary Southern Power. One such project under development is the $220 million solar photovoltaic (PV) plant in Lamesa, Texas, which is expected to use 410,000 fixed-tilt, monocrystalline PV panels to generate about 102 megawatts (MW). Southern Power acquired the solar project--its third in Texas in less than a year's time--from RES America Developments Incorporated in July. For more information, see Industrial Info's project report.

"2016 was a year of tremendous accomplishment for Southern Company," said Thomas A. Fanning, the chairman, president and chief executive officer of Southern, in a quarterly earnings press release. "The acquisitions of Southern Company Gas, PowerSecure and a 50% equity interest in Southern Natural Gas have served to lengthen and strengthen our low-risk, customer-focused business model and are expected to further support our ability to deliver regular, predictable and sustainable long-term earnings and dividend growth."

Southern is currently estimating capital expenditures to total $39.3 billion through 2021, with $22.5 billion attributed to regional electric subsidiaries, $8 billion attributed to Southern Power and $7.7 billion attributed to the natural gas subsidiary.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.