Vancouver-based Westcoast Energy Inc. will pay $75 million tobuy the 50% interest in Empire State Pipeline that it doesn’talready own from Houston-based Coastal Corp., officials saidyesterday. The deal gives Westcoast complete ownership of the156-mile, 24-inch natural gas pipeline running along theU.S.-Canada border near Niagara Falls to Syracuse, NY interconnectpoints.
To fund the acquisition, Westcoast is selling C$129 million ofcommon shares, about four million worth C$32.25 each, to asyndicate of underwriters.
The Empire State Pipeline, which began operations in 1993,includes 10 meter stations and has a rated capacity of 525 MMcf/d.Owned by subsidiaries of Coastal’s American Natural Resources Co.and Westcoast’s St. Clair Pipelines, the pipeline has been operatedby ANR Pipeline Co. subsidiary.
“We now own another key asset in one of the most dynamic regionsof the U.S. natural gas market,” said Westcoast CEO Michael Phelps.”U.S. pipelines generally have better rates of return thanpipelines in Canada.”
For Coastal, the deal is a “major step” toward completing a mergerwith El Paso Energy Corp., said Coastal CEO David Arledge. Thatmerger is expected to close in the fourth quarter, and was firstannounced in January (see Daily GPI,Jan. 19). The companies have already begun consolidating staff,and are tying up loose ends to comply with Federal Trade Commissionrequirements (see Daily GPI, Sept. 15).
The Empire acquisition is expected to close in the first quarterof 2001, conditional upon the completion of the Coastal-El Pasomerger.
On Monday, Empire State Pipeline and the National Fuel Corp.announced that they had completed a new Canadian pipelineinterconnection at Pendleton, NY to flow natural gas from Canada (seeDaily GPI, Nov. 7). Most of the gas willcome from Western Canada, with the new pipeline offering moreflexibility and gas-supply options for Empire’s shippers. Shippers buytheir own gas and then pay a fee to pipelines.
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