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Westcoast to Own All of Empire State Pipeline

Westcoast to Own All of Empire State Pipeline

Vancouver-based Westcoast Energy Inc. has agreed to pay $75 million to buy the 50% interest in Empire State Pipeline that it doesn't already own from Houston-based Coastal Corp. The deal gives Westcoast complete ownership of the 156-mile, 24-inch natural gas pipeline running along the U.S.-Canada border near Niagara Falls to Syracuse, NY interconnect points.

To fund the acquisition, Westcoast is selling C$129 million of common shares, about four million worth C$32.25 each, to a syndicate of underwriters.

The Empire State Pipeline, which began operations in 1993, includes 10 meter stations and has a rated capacity of 525 MMcf/d. Owned by subsidiaries of Coastal's American Natural Resources Co. and Westcoast's St. Clair Pipelines, the pipeline has been operated by ANR Pipeline Co. subsidiary.

"We now own another key asset in one of the most dynamic regions of the U.S. natural gas market," said Westcoast CEO Michael Phelps. "U.S. pipelines generally have better rates of return than pipelines in Canada."

For Coastal, the deal is a "major step" toward completing a merger with El Paso Energy Corp., said Coastal CEO David Arledge. That merger is expected to close in the fourth quarter, and was first announced in January (see NGI, Jan. 24). The companies have already begun consolidating staff, and are tying up loose ends to comply with Federal Trade Commission requirements (see NGI, Sept. 18).

The Empire acquisition is expected to close in the first quarter of 2001, conditional upon the completion of the Coastal-El Paso merger.

Last week, Empire State Pipeline and the National Fuel Corp. announced that they had completed a new Canadian pipeline interconnection at Pendleton, NY to flow natural gas from Canada. Most of the gas will come from Western Canada, with the new pipeline offering more flexibility and gas-supply options for Empire's shippers. Shippers buy their own gas and then pay a fee to pipelines.

Carolyn Davis, Houston

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