EnCana Plans Divestiture of Natural Gas Storage Business
Following a strategic review by its Board of Directors, EnCana Corporation has decided to divest of the company's natural gas storage business either through a competitive auction process or an initial public offering.
EnCana's gas storage business is a leader in the sector, but as a relatively small part of EnCana, gas storage is not considered crucial to the success of the company's upstream North American operations.
"Since commencing operations at Suffield in 1988, EnCana's gas storage has been a strong performer for the company. However, as EnCana continues to sharpen its focus on the exploration and development of its North American gas and oil resource plays, we have decided that EnCana may realize the best value from gas storage through a possible divestiture or an initial public offering," said Gwyn Morgan, EnCana's President & Chief Executive Officer.
For the past year, EnCana has been continuously high-grading its portfolio of assets focusing on unconventional natural gas and oil resource plays across North America. EnCana's planned divestiture of its gas storage business is consistent with the company's other recent divestitures - the U.K. North Sea assets, the Gulf of Mexico interests, Western Canadian conventional producing assets, plus the planned sale of the company's Ecuador interests and its natural gas liquids business.
EnCana's natural gas storage business is North America's largest independent gas storage network. The assets are located in key gas producing and consuming regions and are linked to intercontinental pipelines. EnCana Gas Storage has approximately 174 billion cubic feet of working gas capacity at five facilities in Alberta, California and Oklahoma. The AECO Hub(TM) in Alberta is comprised of three facilities totaling 135 billion cubic feet of storage capacity. Wild Goose Gas Storage Inc. in northern California has 24 billion cubic feet of storage capacity and Salt Plains Gas Storage Inc. in Oklahoma has 15 billion cubic feet of storage capacity. EnCana is also developing a new gas storage project, Starks Gas Storage L.L.C., in southwest Louisiana.
EnCana will retain ownership of its Hythe storage facility, which has
10 billion cubic feet of storage capacity, and may enter into other commercial
storage arrangements with the new owner of the divested assets. EnCana will
soon commence a formal divestiture process that is expected to be completed by
early in 2006.
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