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Enbridge Completes Purchase of Shell Gas Transmission

Enbridge Completes Purchase of Shell Gas Transmission

Enbridge Inc. last week completed its purchase of Shell Gas Transmission LLC (SGT) for $613 million plus associated working capital, which positions the Canadian company as a major player to develop gas supply and transport in the deepwater Gulf of Mexico.

The offshore assets, which Enbridge said it would acquire in November from Shell US Gas & Power LLC, include ownership interests in 11 transmission and gathering pipelines in five major pipeline corridors that transport approximately 3 Bcf/d (see NGI, Nov. 22, 2004). The 1,482 miles of pipeline transport approximately half of all deepwater natural gas production in the Gulf of Mexico.

The assets include Shell's ownership interests in the Stingray (50%), Garden Banks (80%), Nautilus (50%), Mississippi Canyon (100%) and Destin (33 1/3%) pipelines. Also part of the package are six connected deepwater gathering systems, including new lines and extensions currently under construction and scheduled to be in service this year and in 2006. These gathering systems are supported by dedicated reserves under existing life-of-lease contracts with major oil companies and large independent producers, according to Enbridge.

"The successful acquisition of these strategic offshore Gulf assets underlines our commitment to organic growth and to being one of the nation's leading energy transporters," said Dan C. Tutcher, Enbridge group vice president, Transportation South. "We are now well positioned to move much of the developing deepwater gas supply and to accommodate the potential transport needs of several proposed liquefied natural gas re-gasification projects."

Tutcher said he was also "extremely pleased that most of the SGT employees and management team have chosen to join our Houston-based business unit, which will enable us to quickly integrate these assets into our natural gas business and will further add to the industry knowledge and savvy of our excellent natural gas operations and business teams."

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