Cabot LNG Sold To Tractebel for $680M
Cabot LNG, the largest U.S. liquefied natural gas importer and distributor
in the Northeast, agreed last Thursday to sell 100% of its assets to Tractebel
of Brussels, Belgium for $680 million. The deal will give Tractebel the
LNG terminal in Everett, MA, along with 10% interest in a liquefaction
facility in Trinidad and Tobago and the LNG tanker, Matthew. The transaction
is set to close by the beginning of September.
For Tractebel, which already has a relatively large foothold in the
United States as the operator of 20 U.S.-based power plants in 12 states,
the acquisition of the Cabot Corp. subsidiary provides it with a 20% share
of the Atlantic basin, allowing it to serve the power industry in the Northeast
and Mid-Atlantic corridor. The deal also complements TEMI, Tractebel's
North American energy trading arm, which is active in the Boston region.
Most important, however, is the base that it gives Tractebel to grow in
"We have a fairly aggressive business plan and this is not necessarily
the last purchase we will make along these lines," said Philippe vanMarcke,
who heads up Tractebel's mergers and acquisitions division as well as its
strategic activities. He told NGI that Tractebel plans to concentrate its
future growth along the "Boston-to-Richmond" corridor, and also
extend its reach into Texas and states in the Southwest. "We plan
to concentrate our growth in those two areas."
VanMarcke said no changes will be made in the Boston office, and said
that, in fact, Tractebel is looking forward to using Cabot LNG's expertise
to continue on its present record of success.
"Our policy is to be multi-domestic," he said. "We (Tractebel)
have no specific skills in LNG, and we will rely on Cabot to give us their
skills. I see no changes at the present time, and in fact, would say that
the employees should expect a rosy future."
A rosy future definitely awaits Tractebel if Cabot LNG's present success
is indicated. It received 44 cargoes at its Everett terminal in 1999, up
from 18 in 1998, and it expects a 10% to 20% increase in import volumes
this year. It has been running at 60% to 70% of capacity.
Earlier this year, Sithe Energies Inc. agreed to a 20-year gas sales
and purchase plan valued at more than $4 billion to feed its 1,600 MW Mystic
Station in Everett with LNG imported by Cabot (see NGI, Jan.
31). Just this week, Cabot LNG began deliveries to Puerto Rico's new
EcoElectrica power facility under a 20-year agreement. The 507-MW natural
gas-fired power plant is designed to generate as much as 20% of Puerto
Rico's electricity demand. Last year it reactivated its LNG carrier Matthew,
and a few months later it began receiving LNG deliveries from the Atlantic
LNG export facility in Trinidad, contracting for nearly 240 MMcf/d of LNG,
equivalent to 60% of the plant's design capacity.
Cabot LNG --- and now Tractebel --- isn't the only one to benefit from
the growing marketplace. The U.S. Department of Energy reported last year
that LNG imports were up 56% to 39 Bcf in the first quarter of 1999 compared
to the previous year (see NGI, July 19, 1999).
In April, CMS Panhandle Pipe Line Co.'s Christopher Helms estimated
that LNG use could take up to 3.5% of the predicted 30 Tcf of gas demand
by 2010, and said his company is looking to build LNG trade to the same
level as crude oil trading, with Lake Charles, LA serving as the hub for
all operations (see NGI, May 1).
Other LNG players are on the horizon, too. Sonat, an El Paso Energy
subsidiary, successfully petitioned FERC to re-open the Elba Island LNG
import terminal in Georgia. It expects to reactivate that terminal in 2002.
In May, Williams Gas Pipeline bought Columbia Energy's Cove Point LNG in
Lusby, MD for $150 million (see NGI, May 8),
and Williams plans to reopen the terminal also by early 2002.
LNG accounted for about 1% of the U.S. total gas consumption, about
60 Bcf/d, last year, but some predict it could grow to between 5% and 8%
if the four existing plants are expanded.
Cabot LNG is a division of Cabot Corp., and is the only active importer
and distributor of LNG on the East Coast. Through its subsidiary Distrigas,
Cabot LNG imports from Algeria and Trinidad to its marine terminal, and
then distributes the gas to utilities, electric power generators, gas marketing
companies and industrial end users in New England. It supplies about 20%
of the New England gas demand, but it also was in the process of increasing
"In the present market circumstances, this acquisition will contribute
positively to Tractebel's results from the outset," said Tractebel
CEO Jean-Pierre Hansen. "The integration of Cabot LNG will create
synergies with the existing LNG and natural gas operations within our group."
Tractebel, which operates as the sole energy arm of French-based Suez
Lyonnaise des Eaux, provides all of the corporation's energy activities,
including electricity and gas, energy services, engineering and technical
installations and waste management, and it has 70,000 employees worldwide.
It has about 46,000 MW of power generation either already installed or
at an advanced state of development, and 30,000 MW is outside of Belgium.
It also operates gas transport networks in Europe, Latin America and Asia.
Carolyn Davis, Houston