By Dan Christensen, BrowardBulldog.org
When Gov. Rick Scott announced last week that GE Oil & Gas would open a $50 million manufacturing facility in Jacksonville he talked about how it would create 500 new jobs for Florida.
GE Oil & Gas’s official welcome package: up to $15.4 million in financial incentives, including $10 million from the city and $5.4 million from the state.
Not mentioned in the hoopla was how another division of General Electric, GE Energy Financial Services, has invested hundreds of millions of dollars in publicly traded oil and natural gas partnerships in which Scott had a financial interest.
Financial disclosure records made public by Gov. Scott in June show that as of Dec. 31 he was heavily invested in more than two-dozen oil and gas ventures. One was Spectra Energy, which is currently working with Florida Power & Light to build the contentious, $3 billion Sabal Trail pipeline in north Florida.
As BrowardBulldog.org reported in July, Scott and his appointees at the Public Service Commission backed construction of Sabal Trail despite state ethics laws that generally prohibit public officials from owning stock in businesses subject to their regulation. Scott acquired his Spectra shares via a controversial “qualified blind trust,” which by law allows politicians to hide their investment activity and also affords them immunity from prohibited conflicts of interest.
A spokesman for the governor’s re-election campaign, Greg Blair, has said Scott was unaware of his Spectra investment because the trustee of the blind trust made it. Longtime Scott crony Alan Bazaar runs the trustee, Hollow Brook Wealth Management.
Gov. Scott’s oil and gas assets include 18 publicly traded master limited partnerships, some with significant ties to GE Energy Financial Services. Oil and gas master limited partnerships don’t pay corporate income taxes, offering investors liquidity and tax benefits.
For example, the governor reported a $135,800 investment in Houston-based Crestwood Midstream Partners LP. He also disclosed an additional $110,600 stake in Crestwood Equity Partners LP, the master limited partnership that manages and controls Crestwood Midstream.
‘VALUE CREATION FOR STAKEHOLDERS’
Crestwood Midstream announced in June that GE Energy Financial was one of a trio of corporate investors that had agreed to buy up to $500 million worth of its Class A preferred units. The proceeds were earmarked to expand Crestwood’s ability to extract and process shale oil, reduce debt and “provide long-term value creation for all our stakeholders.”
GE Energy Financial made another large investment intended to boost Crestwood last year. In that July 2013 deal, GE provided $80.6 million to a Crestwood subsidiary that gathers and transports fracked natural gas extracted from shale in Wyoming. GE also agreed then to provide a total of up to $150 million in future capital contributions, according to a press release.
“This transaction is another step in the execution of our strategy to position Crestwood in rich gas plays,” Crestwood chairman and chief executive Robert G. Phillips said at the time.
The governor’s spokesman, Greg Blair, said Monday that Scott’s backing for GE Oil & Gas’s Jacksonville plant was not influenced by General Electric’s favorable investments in partnerships in which he owned an interest. Blair also said again that Scott had “no knowledge” of his portfolio holdings “because the decision to invest was made by the trustee of the blind trust.”
GE Oil & Gas’s new plant will manufacture regulators, control valves and other products used by the industry. It is expected to open in November.
Regency Energy Partners, LP is another entity in which GE Energy Financial and the governor shared an interest.
Gov. Scott valued his Regency units at $194,000 as of Dec. 31, while reporting he also had a $206,600 stake in PVR Partners LP, which was acquired by Regency in March.
The governor obtained his Regency units sometime after he created his first blind trust in April 2011. That trust was terminated in June when he publicly disclosed his assets in a move apparently designed to make sure he qualified to run for a second term. The governor immediately opened a new blind trust instrument and placed his assets into it.
Dallas-based Energy Transfer Equity LP, another master limited partnership in which the governor reported owning a $310,600 stake, controls Regency.
Energy Transfer acquired Regency’s general partner from an affiliate of GE Energy Financial for $310 million in May 2010. Affiliates of GE Energy Financial retained 24.7 million limited partner units in Regency, according to a Regency press release.
In an October 2012 report to the U.S. Securities and Exchange Commission, GE reported that its affiliate had reduced its Regency holdings to 8.4 million units, or 4.9 percent of Regency’s outstanding units. The move meant that GE was no longer required to publicly disclose its ownership interest in Regency. Its holdings today, if any, are unknown.
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