Patrick Daniel, president and CEO of Enbridge, addresses the company's annual meeting as Tsohdih Erickson, hereditary chief of the Beaver Clan, from Fort St, James, B.C., wearing a native headdress looks on in Calgary, Wednesday, May 11, 2011Jeff McIntosh/The Canadian Press
Enbridge Inc. has agreed to become a majority owner of the Cabin Gas Plant in British Columbia for $250-million and help finance its development.
The Calgary-based oil pipeline and natural gas distributor said Friday it will pick up a 57.6 per cent stake from Encana Corp. and other co-owners of the property.
The Cabin Gas Plant is located near Fort Nelson, in the Horn River Basin of northeastern B.C. The plant is expected to process 800 million cubic feet of natural gas per day when it goes into service.
Enbridge said it will pay $250-million for the stake and also finance the plant's expansion — raising its investment in the project to about $900-million.
"Our investment in the Cabin Gas Plant development is a substantial initial step in the execution of our strategy to establish a strong position in the Canadian midstream business focused on growing unconventional gas production in B.C. and Alberta," said Al Monaco, president of gas pipelines, green energy and international operations for Enbridge.
"This strategy involves leveraging our gas midstream capabilities from our extensive U.S. operations together with the advantageous cost of capital we can bring to the infrastructure needs of this active area."
Encana has been selling assets to raise money to finance its other far-flung natural gas operations across North America.
For Enbridge, which operates Canada's largest oil pipeline, the deal expands its natural gas business, currently focused on gas distribution in Ontario, Quebec, New Brunswick and New York state.
"Phases 1 and 2 of Cabin will generate an attractive return and provide a significant and growing earnings contribution for years to come, which aligns very well with Enbridge's reliable business model," Mr. Monaco added.
"The investment also comes with substantial growth potential from future development of phases 3 through 6."