AEC Shopping for U.S. Gas Storage Facility
Alberta Energy Co. Ltd. wants to buy or lease another U.S. natural gas
storage facility, but is remaining mum on what region it is targeting and
which companies it may be negotiating with. CEO Gwyn Morgan would only
say last week that his company is negotiating to buy a storage unit for
less than C$100 million, and hopes to complete the deal before year's end.
AEC, which operates the 85 Bcf-capacity AECO-C storage hub in southeastern
Alberta, already has a deal on the table to buy TransCanada PipeLine Ltd.'s
half interest in the Alberta-Wyoming Express oil line, and also to expand
its Cold Lake, AL heavy oil pipeline. However, Morgan has indicated that
natural gas is AEC's strength, already running gas storage facilities in
California, Texas and Alberta.
Following a conference in San Francisco last week, Morgan said AEC is
"looking at both acquisitions and situations where we can move in
and, in effect, manage the assets to add value and take some of the incremental
value that we can add."
One clue as to where the new storage facility might be may be found
is its recent acquisition of McMurray Oil (see NGI, May
8). In that deal, AEC put its stake in the Rocky Mountain region, obtaining
acreage in the Jonah Field in the Green River Basin in southwest Wyoming
- situated near the Opal gas hub.
In the McMurray deal, AEC netted the 245-mile Jonah Field gas gathering
system, which now transports 320 MMcf/d of gas, and is considered ready
for expansion to 440 MMcf/d.
Morgan said the McMurray deal gave AEC "a substantial new growth
platform in the U.S. Rockies, something we have been looking to do for
some time. It's an area that we have been exploring in and of course, now
our exploration programs will be expanded." Its net exploration acreage
in Wyoming to about 135,000 net acres.
In the United States, AEC has the main transportation link to the Opal
hub with its purchase of a 92.5% stake in the Green River Pipeline LLC,
which owns the Jonah Gas Gathering Co. Morgan said the company would like
to buy the other 7% of that pipeline.
Morgan said that his company is expected to generate a cash flow of
about C$8 per share this year, double 1999 numbers. That would put earnings
estimates in the C$4 a share range, which is nearly four times last year's
Carolyn Davis, Houston
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