EnCana Corporation has decided to sell-off its natural gas storage business either through a competitive auction process or an initial public offering, after completing a strategic review of operations.
The Canada-based energy provider’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.
Although EnCana’s gas storage operation is a leader in the sector, it is a relatively small part of EnCana and following its review the company has determined that gas storage is not crucial to the success of the EnCana’s upstream North American operations. If sold the assets could fetch between $600 million and $900 million, Bloomberg said.
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 & CEO.
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. The company’s planned divestiture of its gas storage business is consistent with its other recent divestitures – the UK 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 plans to retain ownership of its Hythe storage facility, which has 10 billion cubic feet of storage capacity. As for the remaining assets, the energy company said it will soon commence a formal divestiture process that is expected to be completed by early in 2006.