A a huge plume of gas burns at a natural gas hydraulic fracturing site in Michigan.DALE G. YOUNG/The Associated Press
Veresen Inc. is paying $1.43-billion (U.S.) for a 50-per-cent stake in a Western U.S. natural gas pipeline system that would supply its proposed liquefied natural gas project on the Oregon coast.
Calgary-headquartered Veresen is buying the stake in the Ruby pipeline from investment firm Global Infrastructure Partners, and it will share the investment with U.S. energy company Kinder Morgan Inc.
The Ruby pipeline carries gas 1,100 kilometres to Oregon from Wyoming. It has been in service for about three years and can carry 1.5 billion cubic feet a day to the Malin, Ore., pipeline hub.
"This is a rare opportunity to acquire a large interest in a core U.S. pipeline asset," said Don Althoff, chief executive officer of Veresen. He added that the deal was appealing for its immediate access to contracted cash flows, along with other benefits.
Mr. Althoff also said the deal would offer "significant future added upside" to the company's Jordan Cove LNG venture, which is designed to export LNG to markets in Asia
Veresen said it would fund the deal in part through an $800-million bought deal financing in the form of subscription receipts, as well as through debt.
The deal is expected to close before the end of the year pending certain approvals, such as the U.S. committee on foreign investment.
The company said it will receive $91-million (U.S.) annually in the form of preferred distributions, and the opportunity for future cash flow following addition contracting.
With a file from reporter Jeffrey Jones in Calgary.