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

To fund the acquisition, Westcoast is selling C$129 million ofcommon shares, about four million worth C$32.25 each, to asyndicate 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 operatedby ANR Pipeline Co. subsidiary.

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

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

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

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

Carolyn Davis, Houston

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