Enbridge Inc. announced Monday that it has entered into an agreement with The Williams Companies Inc. to acquire Williams’ 14.6% interest in both the Canadian and U.S. segments of the Alliance Pipeline. The purchase price aggregates approximately C$270 million, representing 1.1 times the book value of the interest.

The purchase is subject to regulatory approvals and the rights of other Alliance owners to acquire their pro rata share of Williams’ interest. The purchase does not include the Williams interest in the Aux Sable NGL plant, which processes all gas transported on the Alliance Pipeline, and Enbridge will not assume any of Williams’ natural gas transportation commitments in the pipeline.

Based on discussions with other owners of the pipeline, Enbridge expects that certain partners will exercise, in part, their rights of first refusal. As a result, Enbridge expects that upon completion of the transaction it will have increased its interest from approximately 21% to approximately 30% at a cost of approximately C$165 million, and that its ownership level will equal that of the largest other owner, Fort Chicago Energy Partners. Closing is expected early in the fourth quarter.

Steve Malcolm, Williams chairman, said, “We are getting things done to strengthen our finances. This is the third transaction we’ve announced over the past eight days related to asset sales that are already completed or in progress.”

Patrick D. Daniel, Enbridge President and CEO, commented that, “This acquisition fits well with our strategy of expanding our North American presence and involvement with high-quality natural gas pipeline assets. Alliance runs through areas and jurisdictions that are well understood by Enbridge, as it parallels much of our mainline crude oil system from Edmonton to Chicago. Together with the Vector Pipeline operated by Enbridge, Alliance provides a much-needed diversification in supply paths serving our gas distribution interests in Ontario and Quebec.

“With its state-of-the-art technology, favourable tolls and low-cost expansion capability, we expect it will play a significant role in moving northern gas to market later in the decade,” Daniel continued. “These are pure, fee-based infrastructure assets with steady earnings and cash flows, returns which are immediately accretive to earnings per share, and with good long-term growth potential — all the features we look for in a major investment.”

The Alliance Pipeline is a 36-inch diameter pipeline with a capacity of 1.5 Bcf/d. It extends 3000 kilometres from Fort St. John, BC to Chicago, IL.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.