In a move it says would make it the largest natural gas marketer in Canada, the largest natural gas exporter to the United States, and the No. 2 gas marketer in North America, Atlanta-based Mirant Corp. reported on Thursday that it has entered into an agreement to acquire the majority of TransCanada PipeLines Ltd.’s gas marketing business. Terms of the transaction were not disclosed.

Under the agreement, TransCanada said it has agreed to sell the majority of its natural gas marketing and trading operations, including its structured products business, most of its natural gas transportation and storage contracts, as well as lease arrangements for its natural gas marketing offices in the Toronto and Montreal areas. Mirant also assumed control of the netback pool business, which markets the aggregated supply from approximately 550 Canadian natural gas producers. The sale is expected to close in the fourth quarter of this year, pending necessary regulatory, producer and customer approvals.

Adding to its existing presence in Canada, Mirant also would assume control of TransCanada’s offices in Ontario and Quebec. With Canadian headquarters in Calgary and world headquarters in Atlanta, Mirant said it has operated as a Canadian natural gas marketer since June 2000, when it began managing the natural gas marketing operations of Pan-Alberta Gas Ltd. and CanWest Gas Supply Inc.

“Having already established operations in Western Canada, we’re very excited to now further expand our presence into Eastern Canada,” said Rod Pocza, president of Mirant’s Canadian operations. “This acquisition also gives us an enhanced presence in the U.S. Midwest and Northeast natural gas markets.” Pocza stated that he expects to hire a “substantial number” of TransCanada’s 120 employees who work in its gas marketing operation.

Mirant said the transaction would add approximately 5.1 Bcf/d to its natural gas physical marketing volumes, assuming 2000 marketing and trading volume numbers remain steady.

“The sale of the netback pool will end a lengthy contractual arrangement between TransCanada and natural gas producers as well as eliminate any perceived conflict with TransCanada as a marketer-shipper on its pipeline systems,” said Hal Kvisle, TransCanada’s CEO. “We have worked hard to restore a positive working relationship with the netback producers and we appreciate their efforts and cooperation. We plan to work diligently with Mirant and the netback producers to ensure a smooth transition for all parties.”

The companies said they expect to close the transaction in the fourth quarter of this year, subject to, among other things, regulatory, producer and customer approvals. This transaction would immediately contribute to Mirant’s earnings.

TransCanada said this agreements completes the company’s exit from the natural gas marketing and trading business. Effective Oct. 1, TransCanada reached an agreement for the sale of the assets of A.E. Sharp — a natural gas agency and consulting business for Ontario industrial, commercial and institutional customers. TransCanada did not disclose the purchasers and purchase prices.

Also on Oct. 1, TransCanada announced that it had closed on its late September agreement to sell some of its natural gas marketing and trading operations to BP Gas & Power (see Daily GPI, Sept. 24). Included in the sale was CanStates Gas Marketing, a contract to manage gas supply assets for SEMCO Energy Gas Co., and the marketing and trading operations in its Omaha, NE office. Financial details of that transaction were not disclosed as well.

Selling off the gas marketing business was in addition to the divestiture program first begun in 1999 by then-CEO Doug Baldwin, who told investors to expect C$3 billion of the company’s C$26 billion in assets to be put on the auction block by the end of 2001 (see Daily GPI, Oct. 27, 1999). Baldwin later revised the company’s divestiture goal from the previous estimate of C$3 billion to C$3.45 billion (see Daily GPI, Oct. 13, 2000).

“The divestiture program that we announced in December 1999 was intended to strengthen our balance sheet and exit two businesses that we did not consider core to our long term strategy. That was our International and midstream [businesses],” said Glenn Herchak, TransCanada spokesman.

Earlier this year, TransCanada, Canada’s largest natural gas transporter, said it would exit the natural gas marketing business to focus on its core natural gas transmission and power businesses in Canada and the northern tier of the United States (see Daily GPI, May 9). “Our focus is on these two core areas right now,” said Herchak. “The divestiture of the gas marketing business was separate from the strategy to exit the international and midstream businesses.”

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