Midcoast Targeting Canadian Midstream
Midcoast Energy of Houston continued an ongoing buying spree last week.
This time, however, the company has set its sights to the North. Subsidiary
Midcoast Canada Operating Corp. bought the Calmar gas treating plant and
gathering system in Alberta from Probe Exploration Inc. for C$20 million
(US$13.2 million). The company said it has its sights on similar acquisitions
in the future.
The Calmar assets include a 30 MMcf/day amine sweetening plant, 30 miles
of 10-inch and 6-inch gathering pipeline and about 4,000 hp of compression
near Edmonton, AB. The system currently gathers and treats about 26 MMcf/day
of sour gas from 27 producing wells operated by Probe and Courage Energy
Inc. The Calmar gas plant is the only "zero emissions" sour gas
treating plant in the Leduc-Woodbend area of Alberta.
In conjunction with the purchase, Probe made a gas gathering and treating
agreement with Midcoast, including the long-term dedication of Probe's
reserves in the Leduc Field, a right of first refusal agreement on new
or existing midstream assets within a defined 390 square mile area of interest,
and assignment to Midcoast of an existing third-party gathering and treating
Dan Tutcher, president of Midcoast, said, "This acquisition is
the first step toward our goal of developing a larger midstream asset base
in Canada. We believe the environment in Canada is favorable for other
production companies to explore the option of monetizing their midstream
natural gas assets in order to provide capital for the future development
of their reserve base. We will continue to aggressively seek such acquisition
and/or joint venture opportunities to further expand our presence in the
Alberta region." Probe and Midcoast are examining other potential
joint business opportunities.
In January, Midcoast Energy subsidiary Midcoast Energy Resources further
grew its Texas-Louisiana pipeline empire with two separate deals worth
a combined $4.55 million (see NGI Jan. 11, 1999).
The company bought the Mendota gathering pipeline and processing plant
from Seagull Energy Corp., and the Tynan system from Texas Southeastern
Gas Gathering Co.
In December, Midcoast Energy Resources agreed to buy the Gloria pipeline
system in southeastern Louisiana and the Bruni gathering system in South
Texas for nearly $7.53 million from Koch Gateway Pipeline (see NGI Dec. 28, 1998).
In July, Midcoast subsidiary Mid Louisiana Gas Transmission bought all
the stock of Creole Gas Pipeline in southern Louisiana from El Paso Energy
for an undisclosed amount (see NGI July 6, 1998).
Also in July, Midcoast Energy Resources agreed to buy the Anadarko pipeline
system from El Paso Field Services for $35 million cash (see NGI
Aug. 3, 1998). The sale was completed in September.
In May Mid Louisiana Gas bought two short pipelines from Koch Gateway
for $2.6 million cash to serve demand for marketing and transportation
in the Baton Rouge, LA, area (see NGI May 18,
Joe Fisher, Houston
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