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TransCanada locks up Foothills to tighten grip on proposed gaslines
Gary Park, Petroleum News Calgary correspondent
TransCanada PipeLines is putting a hammerlock on the proposed gas pipeline projects from the North Slope and Mackenzie Delta.
Already seen as the front-runner to build a delivery system from the Delta, it moved May 13 to gain sole ownership of Foothills Pipe Lines, which holds the exclusive certificates to build the Canadian portion of the Alaska Highway pipeline.
Calgary-based TransCanada said it will pay Duke Energy C$257 million, including assumed debt of C$152 million, to buy the remaining 50 percent of Foothills that it doesn’t own.
Provided the deal obtains regulatory approval, it is scheduled to close in the third quarter.
Duke’s stake in Foothills stemmed from its takeover of Vancouver-based Westcoast Energy last year, but it is now selling off holdings worth about US$1.5 billion that it doesn’t control, a company spokesman said.
“The Foothills assets fit well with our Western Canada facilities and are integral to moving future northern gas to North American markets,” TransCanada Chief Executive Officer Hal Kvisle said in a statement.
“Our full ownership of Foothills will allow us to continue to grow and optimize our extensive network of natural gas pipelines.” Phase I in operation Along with its rights in Canada, Foothills owns 62 percent of the Alaskan Northwest Natural Gas Transportation Co., which has rights to build and operate the Alaska portion of the highway project, although a final decision rests with the North Slope owners, BP, ExxonMobil and ConocoPhillips.
Phase I, or the so-called “pre-build” portion of the highway project has been operating since 1981 and currently moves 3.3 billion cubic feet per day from Alberta or 30 percent of all Canadian gas exports — with one leg connecting to the Pacific Northwest and California and the other to the U.S. Midwest.
Last August, TransCanada boosted its stake in Northern Border Partners, which operates the U.S. portion of the “pre-build,” by acquiring the Williams Cos. share for US$12 million.
The Duke transaction comes just as TransCanada is on the verge of taking the lead role in the planned Mackenzie Valley pipeline.
It is negotiating with the Aboriginal Pipeline Group and the Mackenzie Delta Producers Group in hopes of securing an equity stake. An announcement is expected by the end of June.
TransCanada has argued that both the Mackenzie Valley and Alaska Highway projects will be needed and it is committed to both. The Duke deal positions it to take advantage of either development, especially now that its main Canadian rival, Enbridge, has conceded it is unlikely to have a stake in moving raw gas from the Delta.
TransCanada operates a network of about 23,000 miles of pipeline across, with its mainline system to all points averaging 7.2 billion cubic feet per day.
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