EnCana Corp. completed the first phase of a $1.5 billion gas storage asset divestiture on Friday, selling the bulk of its AECO Hub storage operations in Alberta, the Salt Plains storage facility in Oklahoma and the proposed Starks Gas Storage complex in Louisiana to the Carlyle/Riverstone Global Power and Energy Fund for $1.3 billion. The assets will be owned by Carlyle/Riverstone subsidiary Niska Gas Storage.

Pending approval by California regulators, Carlyle/Riverstone will complete the purchase of EnCana’s Wild Goose storage facility in California later this year. Once the Wild Goose project is sold and Starks enters operation in 2007, Niska will own about 183 Bcf of working gas storage capacity, including the 85 Bcf Suffield storage field in Alberta, which is part of AECO, the 40 Bcf Countess field in Alberta, also part of AECO, the 15 Bcf Salt Plains field, the 24 Bcf Wild Goose field and the 19 Bcf Starks field.

Development of the Starks field has been approved by FERC. The company also is planning expansions at AECO (Countess, 30 Bcf in additional working gas capacity) and Wild Goose (up to 15 Bcf in additional working capacity), which will boost its total storage holdings to more than 200 Bcf, making it the largest independent storage operator in North America, Niska said.

EnCana is retaining the 10 Bcf Hythe gas storage facility in northwestern Alberta, previously part of AECO, for its own use as the facility is being integrated with EnCana’s upstream operations.

EnCana said it expects an after-tax earnings gain of US$835 million on the total storage sale. The company is planning US$3.3 billion in total asset divestitures this year, including $1.5 billion from storage, $1.42 billion from its Ecuador assets, $350 million from the Chinook oil discovery offshore Brazil (closure expected mid year) and $244 million from the Entrega Pipeline (sold to Kinder Morgan and Sempra Energy).

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