TransCanada PipeLines has taken the first steps in a bold planto divest $3 billion in assets in its Canadian midstream,international and refined products transportation businesses. Thecompany sold subsidiary NovaGas Canada LP’s Provost gas plant andgathering system to a subsidiary of Midcoast Energy Resources Inc.last week for an undisclosed sum and completed the sale of its PeshCreek processing complex and East Australia pipeline system earlierthis month. The total value of the two Canadian processing planttransactions comes to about $42 million.

TransCanada intends to continue unloading midstream andinternational assets as well as the Express Pipeline operation andits Cancarb carbon thermal black manufacturing business in anattempt to gain financial flexibility and refocus on the coreCanadian gas transportation business. The divestitures are expectedto be near completion by the end of the year. The company booked a$700 million net loss during the fourth quarter of last year forall of the discontinued operations being sold.

The first phase of its Canadian midstream divestitures isexpected to be completed this month with the sale of the Gordondaleand Caribou plants. Next month the company will start phase IIwhich will include four other gathering and processing assets,including the Zama Lake, East Crossfield, Mosquito/Parkland andClearville plants and related facilities. The last phase of theG&P assets sales will begin in May. It’s liquids extractionbusiness will be sold as one package, and it may take through theend of the year to complete the sale, a spokesman said.

Although it is not putting price tags on assets, the bulk of the$3 billion proceeds will come from International operations, whichare concentrated in northern Europe, East Asia and Latin America.Canadian midstream assets, including gathering and processing andgas liquids and extraction, will be next on the list in terms ofgreatest value. In total, one-third of its 4,400-person workforcewill be affected.

In contrast to TransCanada, Midcoast is just getting started inCanadian Midstream, and the Provost assets make a good addition tothe other Alberta systems the company bought recently. Provostincludes 80 miles of gas gathering pipeline and a 15 MMcf/d sourgas processing plant and sour gas injection well. The facilitiesare located in east-central Alberta and include the only sour gasgathering and processing system in the area. The system isconnected to 21 oil batteries and gathers primarily associated sourgas production from 900 wells in the Provost area.

“The purchase of the Provost system adds another attractiveasset to our rapidly growing base of operations in Canada,” saidMidcoast Canada President Jim Wright. “Along with the previouslyannounced purchase of the Manyberries system and our acquisitionlast year of the Calmar system, Midcoast will own nearly 200 milesof crude oil and natural gas pipeline and two processing facilitieswith a combined capacity of 45 MMcf/day. We remain very excited bythe prospects we see for future growth in Canada and are continuingto aggressively pursue these opportunities.”

Rocco Canonica

©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.