|
Terasen puts damper on trust conversion talk Company examining various options to monetize assets; trust would generate cash for pipeline expansion plans Gary Park Petroleum News Calgary Correspondent
Vancouver-based Terasen has doused rumors that it is about to spin off a large stake of its natural gas distribution unit into an income trust.
Canada’s third largest pipeline company is in no hurry to place some of the assets from a unit worth about C$1.7 billion into a trust, said Chief Executive Officer John Reid.
The partial conversion has been the subject of intense speculation, which, Reid said, “gave an unfortunately strong weighting to the likelihood of us doing in the near term an income trust relative to the utility assets.”
He told a conference call that Terasen management is examining various options to “monetize existing assets,” but it is a “large stretch” to suggest a trust deal is imminent.
A month ago Reid said creating a trust would be do-able “if the need arises,” while Treasurer David Bryson said a trust was among “a number of fairly significant investment opportunities we are pursuing.”
A trust would generate cash for the parent company’s aggressive expansion plans, which include a decision to proceed with a two-phase expansion of its Trans Mountain pipeline from Alberta to the Pacific Coast, adding 280,000 barrels per day to capacity, and a possible C$1 billion crude oil pipeline from Fort McMurray, the heart of Alberta’s oil sands region, to the company’s Edmonton hub.
Terasen is working on plans to give oil sands producers greater access to Washington state and California refineries as well as Far East markets.
Depending on negotiations with oil sands producers, there could be a three-stage construction totaling 640,000 bpd and costing C$2.1 billion. Fierce rivalry between Terasen and Enbridge It’s all part of a fierce rivalry between Terasen and Enbridge to become the dominant shipper of oil sands production.
Terasen posted earnings in 2003 before non-recurring items of C$136.1 million, compared with C$105.8 million in 2002, while Enbridge’s earnings for last year were C$667.2 million, up from C$576.5 million.
Credit Suisse First Boston analyst Dominique Barker recently described Terasen as the “most focused pipeline company in Canada,” forecasting a jump in net income from its pipeline operations to C$92 million by 2007 from C$29 million in 2002.
Deliveries on the Trans Mountain Canadian mainline averaged 216,100 bpd in 2003 compared with 201,200 bpd in 2002, while its U.S. mainline rose to 54,600 bpd from 47,800 bpd.
Reid also announced that Terasen will build an LNG gas storage plant on Vancouver Island by 2007 at a cost of up to C$180 million in support of the gas-fired generation strategy of BC Hydro.
If the 1 billion cubic foot plant proceeds it will replace the controversial C$180 million Georgia Strait Crossing gas pipeline that has National Energy Board approval, but has been heatedly opposed by several environmental groups.
| 