After a pause for consideration by one potential taker,TransCanada PipeLines, Canada’s second-biggest pool of natural gassupplies is again looking for new owners. Pan-Alberta Gas’president, Ross Weaver, confirmed, “we are still for sale.”
A short list of bidders is forming, following a decision byparent Nova Corp. and TransCanada to exclude the 26-year-old salesagency from their merger. While disclosing no names, Weaver saidthere have been nibbles at Pan-Alberta from “quite a variety” ofproducers and marketers in Canada and the United States since itwas first put on the block in December. The Pan-Alberta presidentindicated a short list of serious bids will be generated startingthis week, with exchanges of confidential memoranda betweenprospective buyers and the aggregator.
With sales topping 1.6 Bcf/d that fetched C$1.6 billion (US$1.2billion) in 1997 for 425 producers who have five Tcf of reserves inthe pool, Pan-Alberta stands second among Canadian suppliers onlyto TransCanada Gas Services. The latter markets five Bcf daily onbehalf of more than 700 producers contributing reserves of 13 Tcf.
TransCanada officials indicated they saw no advantage in tryingto include Pan-Alberta in the merger with Nova. The decision onPan-Alberta’s future was left up to Nova, which has described thesale as dropping an operation that no longer fits with its priorityon profits. Pan-Alberta remains a service agency, as a “supplyaggregator” that earns fees, rather than a brokerage playingmarkets for trading profits, Weaver said.
The sale is structured to ensure it will not be blocked by ahigh-profile court battle between Pan-Alberta and some of itssuppliers. Weaver said the deal takes the form of an assettransfer. That lets the buyer start fresh, leaving the legal fightto continue against Pan-Alberta as a shell company still owned byNova.
The fight is not shrinking Pan-Alberta. It increased supplies bymore than 500 MMcf/d last year. The growth more than offsetdeclines in reserves dedicated to the pool and withdrawals byproducers.
The lifespan of the old-line Canadian aggregators – whichinclude CanWest Gas Supply and ProGas as well as TransCanada andPan-Alberta – is virtually unlimited. Despite the steady growth oftrading houses under deregulation on both sides of theinternational border, the four traditional aggregators continue tomarket about 35% of Canadian gas production.
Membership contracts in aggregator pools run for the lifetime ofdedicated reserves rather than particular periods of years.Reserves rise and fall depending on drilling and development,creating a pool supply profile much like a production company.
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