|
Duke blazes trail into Canada by grabbing Westcoast Energy Westcoast is partner with TransCanada PipeLines in Foothills Pipe Lines, which as the only firm proposal to build an Alaska Highway gas pipeline Gary Park PNA Canadian Correspondent
Duke Energy has made the first raid from the United States on Canada's pipeline infrastructure by bidding $8.5 billion for Westcoast Energy that might give it a major role in shipping Arctic gas from the North Slope and Mackenzie Delta.
With the backing of Westcoast's board of directors, Duke is offering C$43.80 a share, a 15 percent premium on Sept. 20's closing price, and is ready to assume $4 billion of Westcoast debt.
Duke president, chairman and CEO Richard B. #Priory said Sept. 21 that his company's goal is to build a North American energy network using Westcoast's 75 percent stake in the pipeline delivering Sable gas field from offshore Nova Scotia to New England and its proposals to build pipelines out of the Arctic.
Vancouver, British Columbia-based Westcoast is a joint partner with TransCanada PipeLines in Foothills Pipe Lines, which has the only firm proposal to build an Alaska Highway gas pipeline. The two major shippers of Canadian gas are also negotiating with Mackenzie Delta producers on a possible Mackenzie Valley line.
Duke said the combination will enable Duke to build a new transportation infrastructure "that will strengthen our ability to connect energy supply and energy markets in Canada and the United States."
"This is the construction of the first major gas and electricity company across" the Canada-U.S. border, he said.
Shareholders, regulators need to approve Westcoast chairman and CEO Michael Phelps said that despite the slump in gas prices and uncertainty stemming from the terrorist attacks on the United States, he has a high level of confidence "about the growth requirement for energy, energy infrastructure and specially for the role of gas in that economy."
He said a Duke takeover of Westcoast would be an "ideal marriage," providing a solid U.S. infrastructure platform, access to premium markets in the United States, along with Canadian infrastructure which can access Canadian supplies.
If the deal is approved by shareholders and regulators, the new company will have 30,000 kilometers of major pipelines, 122,000 kilometers of gathering and distribution pipelines, 241 billion cubic feet of gas storage and annual revenues of $89 billion.
FirstEnergy Capital pipeline analyst William Lacy said pipeline deals are extremely rare because of the many regulatory hurdles.
But he said completion of the deal could trigger consolidation of other pipelines as well as utilities.
| 