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Enbridge increases stake in proposed Arctic natural gas delivery system
Gary Park, PNA Canadian correspondent
Enbridge Inc., Canada’s second largest energy pipeline company, has tightened its hold on Alliance Pipeline Ltd., which could be a major delivery option to the U.S. Midwest for gas from either the Mackenzie Delta or Alaska.
The Calgary-based company announced March 20 that, along with Fort Chicago Energy Partners, it has bought out another U.S. owner of Alliance.
The combined C$406 million deal for Duke Energy Corp’s 11.8 percent stake in Alliance will leave Enbridge and Fort Chicago as joint 50-50 owners of Alliance, a 36-inch diameter pipeline with capacity of 1.55 billion cubic feet per day from northwestern British Columbia to Chicago. For another C$19 million each, the two companies will take over Duke’s interest and own about 43 percent each of the Aux Sable natural gas liquids plant in Chicago, at the outlet of the Alliance pipeline.
Patrick Daniel, president and chief executive officer of Enbridge, said the new owners will simplify the governance and flexibility of Alliance and “pursue a variety of opportunities to enhance the value of this assets to both shippers and owners.”
He said Alliance is expected to “play a significant role in moving northern gas to market later in the decade.” Only northern pipeline operator in Canada Enbridge operates the only oil and gas pipelines north of the 60th parallel in Canada and, although it has kept a low-key profile in discussions about a Mackenzie Valley pipeline it has said that both the valley and Alaska Highway projects are technically viable if they proceed as separate ventures.
Wayne Sartore, Enbridge’s vice president of northern development, said a year ago that finding new reserves is a wild card that will either make or break the economics of a potential Arctic gas pipeline.
Enbridge said last May that it had embarked on acquisition talks with a number of financially troubled U.S. firms that were eager to sell assets and improve their balance sheets. Within five months, it paid C$270 million for Williams Cos.’ 14.6 percent stake in Alliance, followed by a C$125 million purchase of El Paso Corp.’s 6.1 percent stake in the pipeline, along with El Paso’s holdings in the Aux Sable plant and AC Marketing, which has long-term contracts for 75 million cubic feet per day of transportation capacity on Alliance.
The C$550 million Aux Sable liquids extraction and fractionation facility has a designed capacity of 70,000 barrels per day and on-site storage for 200,000 barrels of liquids.
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