Macquarie Infrastructure Holdings, LLC owns and operates businesses that provide products to corporations, government agencies, and individual customers in Hawaii. Macquarie Infrastructure Management (USA) Inc. serves as the external manager of the company.
In September 2021, the company completed the sale of its Atlantic Aviation business to KKR Apple Bidco, LLC, a Delaware limited liability company controlled by funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (KKR).
The company’s bu...
Macquarie Infrastructure Holdings, LLC owns and operates businesses that provide products to corporations, government agencies, and individual customers in Hawaii. Macquarie Infrastructure Management (USA) Inc. serves as the external manager of the company.
In September 2021, the company completed the sale of its Atlantic Aviation business to KKR Apple Bidco, LLC, a Delaware limited liability company controlled by funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (KKR).
The company’s business comprises Hawaii Gas, Hawaii’s only government-franchised gas utility and an unregulated LPG (liquefied petroleum gas) distribution business providing gas and related services to industrial, commercial, residential, and governmental customers; controlling interests in two solar facilities on Oahu; and smaller projects collectively engaged in efforts to improve the reliability and sustainability of energy in Hawaii.
Hawaii Gas serves the State’s approximately 1.4 million residents and approximately 6.8 million visitors in 2021, across Oahu, Hawaii, Maui, Kauai, Molokai, and Lanai (the main islands).
Hawaii Gas’ utility business includes the processing, distribution, and sale of synthetic natural gas (SNG) and renewable natural gas (RNG); and the distribution and sale of regasified liquefied natural gas (LNG) on the island of Oahu, as well as the distribution and sale of LPG via pipeline on all of the main islands. Hawaii Gas’ unregulated business distributes LPG by truck to individual tanks located on customer sites or distributes LPG in cylinders filled at central locations to customers on all the main islands. Customers include a wide variety of industrial, commercial, residential, hospitality, military, public sector, and wholesale users.
Hawaii Gas’ primary products consist of:
Synthetic Natural Gas: The business converts a light hydrocarbon feedstock (naphtha) into SNG, predominantly consisted of methane and hydrogen, having a similar heating value to natural gas. Hawaii Gas operates the only SNG processing capability in Hawaii at its plant located on the island of Oahu. SNG is delivered by underground pipelines to utility customers throughout Oahu.
Liquefied Natural Gas: LNG is transported to Hawaii in conventional intermodal cryogenic containers from the U.S. mainland. Hawaii Gas is authorized to substitute up to 30% of its SNG production with LNG to supply customers of the regulated utility on Oahu.
Liquefied Petroleum Gas: LPG is a generic name for a mixture of hydrocarbon gases, typically propane and butane. LPG liquefies at a relatively low pressure under normal temperature conditions and can be efficiently transported in various quantities. LPG is typically stored in cylinders or tanks and Hawaii Gas maintains the largest network of LPG storage in Hawaii. Industrial/commercial/residential applications of LPG are similar to those of natural gas and SNG.
Renewable Natural Gas: Hawaii Gas collects, purifies, and injects biogas from the Honouliuli Wastewater Treatment Plant into the utility pipeline distribution system on Oahu. The business is evaluating a range of additional renewable natural gas sources, including other wastewater treatment plants, landfills, and locally produced biomass.
Customers
The company’s business provides services to industrial, commercial, residential, hospitality, military, public sector, wholesale and governmental customers.
Regulation
The company’s utility operations are regulated by the Hawaii Public Utilities Commission (HPUC). The company’s utility rates are established by the HPUC in periodic rate cases typically initiated by Hawaii Gas.
The company’s operations are also regulated by agencies, including the Pipeline and Hazardous Materials Safety Administration, Department of Transportation, Environmental Protection Agency, Hawaii Department of Health, and state and local environmental agencies.
Fuel Supply, SNG Plant, and Distribution System
Fuel Supply
Hawaii Gas sources naphtha feedstock for its SNG plant from Par Hawaii Refining, LLC pursuant to a contract that expires in December 2023. The majority of Hawaii Gas’ LPG is purchased from an off-island supplier pursuant to a contract that expires in December 2024. Hawaii Gas sources LNG from a U.S. mainland supplier pursuant to a contract that expired in July 2021, for which an extension is being negotiated. RNG feedstock is purchased from the City and County of Honolulu under a fixed rate contract that expires in December 2024.
SNG Plant and Distribution System (Utility)
Hawaii Gas processes and distributes SNG from a plant located on the west side of Oahu. A 22-mile transmission pipeline links the SNG plant to a distribution system consisting of approximately 900 miles of distribution and service pipelines transports gas to customers. On islands other than Oahu, LPG is distributed by direct deliveries from an off-island shipper and by barge from Oahu to holding facilities or baseyards on those islands. It is then distributed via pipelines to utility customers. Approximately 90% of the Hawaii Gas pipeline system is on Oahu.
Distribution System (Non-Utility)
The non-utility operation of Hawaii Gas provides LPG to customers that are not connected to Hawaii Gas’ utility pipeline system on each of the main islands. The majority of Hawaii Gas’ non-utility customers are on islands other than Oahu. LPG is transported to these islands by direct deliveries from an off-island shipper and by barge from Oahu. Hawaii Gas also owns the infrastructure by which it distributes LPG to its customers, including harbor pipelines, trucks, several holding facilities, and storage baseyards on Kauai, Maui, and Hawaii.
Strategy
The company’s strategy is to realize value for its unitholders by completing the Merger, or an alternate transaction to the extent that the Merger is not ultimately successful.
On June 14, 2021, the company entered into a Merger Agreement with AMF Hawaii Holdings, LLC (AMF Parent), a Delaware limited liability company affiliated with Argo Infrastructure Partners, LP (Argo), and AMF Hawaii Merger Sub, LLC (AMF Merger Sub), a recently formed Delaware limited liability company and wholly-owned direct subsidiary of AMF Parent (the ‘Merger’).
From an operational perspective, the company’s strategy centers on ensuring that it continues to provide quality products to the company’s customers in a safe and reliable manner that over the long term is consistent with Hawaii’s goals of carbon neutrality by 2045.
History
Macquarie Infrastructure Holdings, LLC, a Delaware Corporation, was founded in 2004.
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