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Canadian Producers to Acquire Pan-Alberta Gas

Canadian Producers to Acquire Pan-Alberta Gas

Pool marketer Pan-Alberta Gas and a consortium of seven producing companies have reached agreement on the terms under which the marketing company will be offered for sale to the more than 435 Canadian producers in the pool. The announcement of the agreement confirmed earlier reports that a Canadian coalition was expected to win out over bids from major U.S. marketers. (See NGI, July 13)

At least 60% (by volume) of pool suppliers must agree to participate for the sale to go through. The seven companies, led by Paramount Resources , have 18% of current deliverability of 1.7 Bcf/d. "Producer ownership is a logical and very positive outcome for Pan-Alberta," said Clay Riddell, president of Paramount. "I am confident that we can close this deal and gain control of this very important business for producers."

Ross Weaver, president of Pan-Alberta, said a new team "over the past year and a half has added significant value for producers and our market customers."

Financing also must be arranged and court approval must be gained for a plan to sever the business being sold from ongoing litigation between pool producers and Nova (now TransCanada). The other producers in the consortium include Canadian Natural Resources, Ranger Oil, Crestar Energy, Rio Alto Exploration, Pacific Cassiar, and Signalta Resources.

Former owner Nova Corp. had announced its intention to sell the marketing company last December, after negotiations over the lawsuit had stalled and before Nova became a part of TransCanada PipeLines in a merger effective last month. Producers are claiming the aggregator owes them hundreds of millions of dollars for their gas which allegedly was diverted to a Nova affiliate at lower-than-market prices.

In connection with the suit filed in 1996 some producers said the only real cure would be for Nova to sell Pan-Alberta because the marketer's affiliation with a pipeline company posed an inherent conflict with producers' interests.

When Pan-Alberta was put up for sale last year, a Nova executive said "it's not the kind of business that provides the kind of returns Nova wants. It doesn't add a lot of profitability to Nova." (See NGI, Dec. 8, 1997)

Meanwhile, the omnibus Canadian peace pact announced in April, which removed obstructions to the Nova-TransCanada merger and endorsed Alliance Pipeline, also set new rules for producer monitoring of marketing activities by aggregators. The Pan-Alberta pool, with 5 Tcf of reserves is the second largest exporter next to TransCanada Energy Services.

Ellen Beswick

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ISSN © 2577-9877 | ISSN © 1532-1266
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