BP Amoco’s recently established Gas & Power division isbuying the remaining shares of ProGas Ltd. it does not already own.The acquisition will bring the volume of Canadian gas marketed byBP Amoco Gas & Power to 3 Bcf/d and increase its total NorthAmerican sales to 7 Bcf/d.

ProGas of Calgary, Canada’s second largest gas supplyaggregator, buys gas from about 170 producers in the WesternCanadian Sedimentary Basin and markets gas across North America. Inits most recent fiscal year, ProGas sold more than 500 Bcf, orabout 1.45 Bcf/d. ProGas claims to be Canada’s first producer-ownedgas marketer. BP Amoco currently owns two of 12 equal shares ofProGas with the remaining shares held by other producers. They areEsso, PanCanadian, Mobil, Union Pacific Resources, Numac, Encal,Wascana (which has been acquired by Canadian Occidental), Home Oil,Talisman, and Coral Energy. Amoco acquired its second share inProGas when it bought Dome Petroleum in the late 1980s.

The producers earlier this year put the company up for sale, andBP Amoco was successful in the competitive bidding process. BrianFrank, vice president of BP Amoco Gas & Power, Canada, said BPAmoco was determined to see that ProGas remained under producercontrol. “It gives us expanded access to customers, both upstreamand downstream,” Frank said of ProGas.

“I think the aggregators in Canada are really evolving becausethey do have their roots in a regulated era and now they’reevolving in a more competitive and dynamic market. The role ofProGas going forward is still something we need to discuss with thepool. …[W]e certainly have designs on growing our marketing andtrading business in North America. In a Canadian context, ProGaswas an excellent fit.”

BP Amoco launched its Gas & Power business in September,said Gas & Power Chief Executive Richard Flury. “The newdivision aims to materially grow the BP Amoco Group’s gas and powerinterests in downstream markets around the world. The ProGasacquisition moves us into a position as one of North America’sleading gas marketing businesses.”

BP Amoco is North America’s largest producer and privatereserves holder of gas, producing 3.5 Bcf/d. BP Amoco affiliateAmoco Canada Petroleum Co. is the legal entity which currently ownsthe ProGas shares and will be the legal entity which will acquirethe remaining shares. The deal is to be effective Nov. 1 withclosing expected by Dec. 31.

Ken MacDonald, ProGas CEO, said he doesn’t think bringing ProGasunder the ownership of a single company will change operations muchin the immediate future. He said ProGas has grown significantlyover the last 10 years from 1988 sales of about 250 MMcf/d to lastyear’s 1.45 Bcf/d.

In the first quarter of next year, ProGas expects to begincontract renewal negotiations with producers. The contract, whichincludes an incentive-based fee for ProGas, will be up for renewalin November 2000. It is expected to come up for renewal every twoyears thereafter, MacDonald said, but the door is open for a longeror shorter term.

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