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Midcoast Targeting Canadian Midstream

Midcoast Targeting Canadian Midstream

Midcoast Energy of Houston continued an ongoing buying spree last week. This time, however, the company has set its sights to the North. Subsidiary Midcoast Canada Operating Corp. bought the Calmar gas treating plant and gathering system in Alberta from Probe Exploration Inc. for C$20 million (US$13.2 million). The company said it has its sights on similar acquisitions in the future.

The Calmar assets include a 30 MMcf/day amine sweetening plant, 30 miles of 10-inch and 6-inch gathering pipeline and about 4,000 hp of compression near Edmonton, AB. The system currently gathers and treats about 26 MMcf/day of sour gas from 27 producing wells operated by Probe and Courage Energy Inc. The Calmar gas plant is the only "zero emissions" sour gas treating plant in the Leduc-Woodbend area of Alberta.

In conjunction with the purchase, Probe made a gas gathering and treating agreement with Midcoast, including the long-term dedication of Probe's reserves in the Leduc Field, a right of first refusal agreement on new or existing midstream assets within a defined 390 square mile area of interest, and assignment to Midcoast of an existing third-party gathering and treating agreement.

Dan Tutcher, president of Midcoast, said, "This acquisition is the first step toward our goal of developing a larger midstream asset base in Canada. We believe the environment in Canada is favorable for other production companies to explore the option of monetizing their midstream natural gas assets in order to provide capital for the future development of their reserve base. We will continue to aggressively seek such acquisition and/or joint venture opportunities to further expand our presence in the Alberta region." Probe and Midcoast are examining other potential joint business opportunities.

In January, Midcoast Energy subsidiary Midcoast Energy Resources further grew its Texas-Louisiana pipeline empire with two separate deals worth a combined $4.55 million (see NGI Jan. 11, 1999). The company bought the Mendota gathering pipeline and processing plant from Seagull Energy Corp., and the Tynan system from Texas Southeastern Gas Gathering Co.

In December, Midcoast Energy Resources agreed to buy the Gloria pipeline system in southeastern Louisiana and the Bruni gathering system in South Texas for nearly $7.53 million from Koch Gateway Pipeline (see NGI Dec. 28, 1998).

In July, Midcoast subsidiary Mid Louisiana Gas Transmission bought all the stock of Creole Gas Pipeline in southern Louisiana from El Paso Energy for an undisclosed amount (see NGI July 6, 1998). Also in July, Midcoast Energy Resources agreed to buy the Anadarko pipeline system from El Paso Field Services for $35 million cash (see NGI Aug. 3, 1998). The sale was completed in September.

In May Mid Louisiana Gas bought two short pipelines from Koch Gateway for $2.6 million cash to serve demand for marketing and transportation in the Baton Rouge, LA, area (see NGI May 18, 1998).

Joe Fisher, Houston

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