Cadiz, Inc. (NASDAQ: CDZI) (the "Company" or "Cadiz") announced today that it has entered into an agreement to purchase 180-miles of steel pipe from the terminated Keystone XL Pipeline Project. The Company plans to use the steel pipe for the construction of a pipeline network connecting the Company's groundwater bank in the Mojave Desert to major water networks in the Southwestern U.S. The 180 miles of new steel pipe will be added to the Company's expansive portfolio of pipeline assets, including 220 miles of existing pipeline acquired by the Company from El Paso Natural Gas in 2021. The 180 miles of new steel pipe will be used to expand the Company's pipeline network creating the largest new groundwater bank in the Southwest. The Company plans to begin construction in 2025.
"Repurposing fossil fuel infrastructure to deliver clean water to underserved communities is core to our mission," said Cadiz CEO Susan Kennedy. "Securing this steel will enable the Company to bring this critical infrastructure online faster and more efficiently."
"It's inspiring to see that sometimes hope and history align. The steel from the Keystone pipeline has found a new purpose—now transporting what gives life to everything: water. I commend the Cadiz leadership for their vision of creating a better future for our children." Dave Archambault II, Former Tribal Chairman Standing Rock Sioux Tribe.
The Keystone XL crude oil pipeline project sponsored by Canadian company, TC Energy, was terminated in 2021 after the Biden Administration revoked a presidential permit which would have allowed the pipeline to cross the Canada-U.S. border. Approximately 200 miles of unused steel pipeline from the abandoned project is currently stored on land in North Dakota. After several months of diligence to determine the suitability of the 36" steel pipe for transportation of water, Cadiz determined the Keystone pipe was a perfect fit for the Company's groundwater banking project in the Mojave Desert (the "Mojave Groundwater Bank").
"Converting the Keystone from an oil pipeline to a water pipeline serving disenfranchised communities is the ultimate definition of environmental justice," said David Sickey, former Senior Advisor to the U.S. Department of Energy and former Chairman Coushatta Tribe of Louisiana.
In October, the Company announced it had entered into a letter of intent (the "LOI") with a non-profit investment fund ("Fund') for a prospective investment up to $150 million for the construction, ownership, and operation of the Mojave Groundwater Bank. Under the terms of the LOI, the Fund along with other non-profit and public sector investors, including federally recognized Native American Tribes, will provide up to $401 million of equity capital to acquire assets and fund the construction of facilities for the Mojave Groundwater Bank, presently estimated in the amount of $800 million. The parties will coordinate to seek available grant funding for any remaining construction costs.
For additional details regarding the Company's agreement for the purchase of the steel pipe assets, please refer to its Current Report on Form 8-K filed with the SEC today, November 12, 2024.
