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