TransCanada Corp. CEO Hal Kvisle stressed the stability of existing Western Canadian gas production and the promise of new supply from the Mackenzie Delta and Alaska in announcing the completion of its purchase of Gas Transmission Northwest Corp. (GTNC) from National Energy & Gas Transmission Inc. for US$1.7 billion, including US$500 million of assumed debt.
The principal assets of GTNC are Gas Transmission Northwest (GTN), which extends from TransCanada’s pipeline assets in British Columbia to the California border at Malin, OR, and North Baja Pipeline, an 80-mile system that currently transports gas to Baja California Norte from point near Ehrenberg, AZ. It cross the U.S.-Mexico border near Ogilby, CA. TransCanada expects that gas flows on North Baja eventually could be reversed because of the liquefied natural gas import terminals planned in Baja California.
“This acquisition is an excellent strategic fit for TransCanada,” said Kvisle. “The GTN pipeline is essentially an extension of TransCanada’s existing B.C. and Foothills pipeline systems, while North Baja is a solidly contracted pipeline that is also well positioned for future growth. In addition to the pipeline assets, we are acquiring a team of experts who will continue to provide safe, reliable service to GTN and North Baja customers.”
Kvisle said that TransCanada has a long-term commitment to serve the Pacific Northwest and California markets. Although the company has not planned a mainline expansion on the GTN system, it said last week in announcing third quarter earnings that laterals to power plants and other customers could be built depending on market commitments.
“The Western Canadian Sedimentary Basin represents a large and stable supply of natural gas and over the past few years we have expanded our pipeline systems to better serve the Pacific Northwest and California,” Kvisle said. “We’re also well-positioned to transport frontier supplies from the Mackenzie Delta and Alaska to these markets.”
TransCanada completed the GTN acquisition using cash resources on hand and the issuance of notes payable. It expects the purchase to be accretive to earnings and cash flow immediately.
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