EnCana Seeking Buyers for Two Pipelines
EnCana Corporation is seeking potential buyers for its indirect 70-percent interest in the Cold Lake Pipeline System and its indirect 100-percent interest in the Express Pipeline System. These crude oil transportation pipelines serve Canada's growing oil sands production area and supply Canadian crude to the U.S. Rocky Mountain and Midwest regions.
"After a strategic review of EnCana's assets, we have determined that we do not need to own these pipeline systems to assure ourselves of sufficient transportation capacity to meet EnCana's requirements," said Bill Oliver, President of EnCana's Midstream & Marketing division. "And given our rich portfolio of upstream growth opportunities, we look forward to re-deploying capital into core exploration and production initiatives that are more consistent with our strategic direction.
"EnCana has been a driving force in developing this oil transportation infrastructure for Canada and we believe it is an opportune time for us to conduct a formal assessment of the market's interest in the assets," Oliver said. "These are high-quality pipeline systems that have solid capacity commitments and exceptional expansion opportunities. They are strategically positioned to carry rapidly growing production from Canada's oil sands regions to the Padd II and Padd IV refining markets in the U.S."
The 297-mile Cold Lake Pipeline System consists of two legs. The west leg between Cold Lake and Edmonton, Alberta consists of a 24-inch blend pipeline and a 12-inch diluent pipeline. The 24-inch line has a delivery capacity of up to 235,000 barrels per day of blended bitumen to Edmonton and the 12-inch line moves condensate from Edmonton to the Cold Lake area. The south leg is a 24-inch line with a delivery capacity of up to 200,000 barrels per day of blended oil from Cold Lake to Hardisty, Alberta, where it connects with Express and another interprovincial pipeline carrier.
The 1,717-mile Express Pipeline System consists of two major pipelines: Express and Platte. The 24-inch Express pipeline runs 785 miles from Alberta's oil transportation hub at Hardisty to Casper, Wyoming. It delivers up to 172,000 barrels per day of Canadian crude to the U.S. Rocky Mountain states of Montana, Wyoming and Utah. The 20-inch Platte Pipeline, 932 miles in length, has a delivery capacity of up to 150,000 barrels per day of oil from Casper to Wood River, Illinois, serving refineries in Colorado, Kansas and Illinois. The Express pipeline, from Hardisty to Casper, can be expanded to 280,000 barrels per day with comparatively modest investment in pumping stations.
In 2001, the Cold Lake and Express assets generated approximately $140 million of EBITDA (earnings before interest, taxes, depreciation and amortization). Net book value of the capital assets on December 31, 2001, in the Alberta Energy Company Ltd. financial statements, was approximately $1.3 billion. The assets are held through Alberta Energy Company Ltd., an indirect wholly owned subsidiary of EnCana.