Pool marketer Pan-Alberta Gas and a consortium of sevenproducing companies have reached agreement on the terms under whichthe marketing company will be offered for sale to the more than 435Canadian producers in the pool. The announcement of the agreementconfirmed earlier reports that a Canadian coalition was expected towin out over bids from major U.S. marketers. (See NGI, July 13)

At least 60% (by volume) of pool suppliers must agree toparticipate for the sale to go through. The seven companies, led byParamount Resources , have 18% of current deliverability of 1.7Bcf/d. “Producer ownership is a logical and very positive outcomefor Pan-Alberta,” said Clay Riddell, president of Paramount. “I amconfident that we can close this deal and gain control of this veryimportant business for producers.”

Ross Weaver, president of Pan-Alberta, said a new team “overthe past year and a half has added significant value for producersand our market customers.”

Financing also must be arranged and court approval must begained for a plan to sever the business being sold from ongoinglitigation between pool producers and Nova (now TransCanada). Theother producers in the consortium include Canadian NaturalResources, Ranger Oil, Crestar Energy, Rio Alto Exploration,Pacific Cassiar, and Signalta Resources.

Former owner Nova Corp. had announced its intention to sell themarketing company last December, after negotiations over thelawsuit had stalled and before Nova became a part of TransCanadaPipeLines in a merger effective last month. Producers are claimingthe aggregator owes them hundreds of millions of dollars for theirgas which allegedly was diverted to a Nova affiliate atlower-than-market prices.

In connection with the suit filed in 1996 some producers saidthe only real cure would be for Nova to sell Pan-Alberta becausethe marketer’s affiliation with a pipeline company posed aninherent conflict with producers’ interests.

When Pan-Alberta was put up for sale last year, a Nova executivesaid “it’s not the kind of business that provides the kind ofreturns Nova wants. It doesn’t add a lot of profitability to Nova.”(See NGI, Dec. 8, 1997)

Meanwhile, the omnibus Canadian peace pact announced in April,which removed obstructions to the Nova-TransCanada merger andendorsed Alliance Pipeline, also set new rules for producermonitoring of marketing activities by aggregators. The Pan-Albertapool, with 5 Tcf of reserves is the second largest exporter next toTransCanada Energy Services.

Ellen Beswick

©Copyright 1998 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.