Enbridge Inc. said Wednesday it has entered into an agreement to buy Shell’s natural gas pipeline and gathering operations in the Gulf of Mexico for an estimated US$613 million.

The assets, which the Toronto-based energy company would acquire from Shell US Gas & Power LLC, includes Shell’s interests in 11 transmission and gathering pipelines in five major pipeline corridors that currently move approximately 3 Bcf/d and transport about half of all deepwater natural gas production in the Gulf. The sale is expect to close by year-end, subject to receiving regulatory approvals and customary closing conditions.

The sale package comprises five gas transmission systems regulated by FERC and located in the Louisiana and Mississippi offshore waters of the Gulf, including Shell’s ownership interests in the Stingray (50%), Garden Banks (80%), Nautilus (50%), Mississippi Canyon (100%) and Destin (33 1/3%) pipelines. Also part of the package are six connected deepwater gathering systems, including new lines and extensions currently under construction and scheduled to be in service in 2005 and 2006. These gathering systems are supported by dedicated reserves under existing life-of-lease contracts with major oil companies and large independent producers, Enbridge noted.

Enbridge said it will assume Shell’s role as commercial manager and field operator for most of the offshore gas pipeline systems, which have a landed capacity of approximately 4.7 Bcf/d and comprise about 1,482 miles of pipe.

This transaction “immediately establishes Enbridge as a major natural gas transporter in the Gulf — one of the key regions for continental supply growth and an area with significant potential for undiscovered natural gas reserves,” said Enbridge President and CEO Patrick D. Daniel. “It provides us with a new growth platform with good upside potential, and is financially and strategically attractive.”

Enbridge expects to fund the acquisition with existing liquidity and credit capacity, and it anticipates that it will be accretive to earnings by up to C$0.14 per share in 2005, Daniel said.

“We’ll also be well situated to transport potential volumes from LNG regasification facilities proposed in the Gulf,” noted Dan C. Tutcher, Enbridge group vice president, transportation south.

He noted that Enbridge plans to add members of Shell’s management team and staff to its Houston office, “so that the commercial and operational oversight of these systems continues to bring Enbridge and its customers the value, reliability and growth anticipated.”

Shell executive Catherine Tanna said the sale was part of an ongoing program of portfolio rationalization by Shell, and enables the Houston-based company to focus on its core upstream activities in the Gulf. Shell’s US Exploration & Production business will retain existing contracted long-term access to the pipelines once ownership is transferred to Enbridge, Shell noted.

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