Enbridge Inc. is selling its stakes in the Alliance pipeline and Aux Sable gas processing facility to Pembina Pipeline Corp. for $3.1 billion.
The Alliance pipeline is a 3,848-kilometre pipeline stretching southeast from B.C. that brings gas into Chicago’s Aux Sable, one of the largest natural gas liquids processing facilities in North America.
Enbridge currently owns 50 per cent of Alliance and 42.7 per cent of Aux Sable, while Pembina Pipeline owns the remaining 50 per cent of Alliance and 42.7 per cent of Aux Sable.
As part of the transaction, Pembina, which is the current operator of Aux Sable, will become the sole operator of Alliance.
Enbridge said Wednesday the proceeds from the sale will fund a portion of its previously announced US$14-billion acquisition of three U.S.-based gas utilities from Virginia-based Dominion Energy.
That deal, which was announced in September, is expected to close next year and will see Enbridge double the scale of its gas utility business through the purchase of the East Ohio Gas Company, Questar Gas Company and its related Wexpro companies, and the Public Service Company of North Carolina.
For its part, Pembina said the acquisition increases the company’s exposure to natural gas and natural gas liquids, as well as expanding Pembina’s presence and reputation in the U.S. market.
Pembina also said that supply and demand projections for the North American natural gas market support a favourable outlook for both Alliance and Aux Sable.
The company said the expected completion of LNG Canada as well as a projected significant expansion of U.S. Gulf Coast LNG (liquefied natural gas) export capacity should boost demand for natural gas transportation.
The $3.1 billion purchase price includes $327 million of assumed debt.
The deal is subject to regulatory approval and expected to close in the first half of 2024.
This report by The Canadian Press was first published Dec. 13, 2023.
© 2023 The Canadian Press
Enbridge Inc. announced that it has signed an agreement to sell its interests in two entities to Pembina Pipeline Corporation for a total deal value of $3.1 billion.
Enbridge’s interests in the Alliance Pipeline Ltd. and its 50% interest in Aux Sable Canada Ltd. will both be transferred to Pembina in this transaction.
The Alliance Pipeline is a 3400-kilometer natural gas pipeline that runs from the oil-rich province of Alberta in Western Canada to various markets in the United States, including Chicago, Illinois. Additionally, Aux Sable Canada Ltd. is a natural gas liquids (NGL) stranded gas processing facility located in Alberta.
Both Alliance and Aux Sable represent core assets to Enbridge and have contributed to the company’s success and growth over the years. However, this transaction signifies a new strategic focus for Enbridge, allowing the company to focus its resources on growing its core business and maximizing the returns of its shareholders.
The deal is expected to close in the fourth quarter of 2019 and will further position Pembina as a significant player in the gas and NGL markets.
The cash proceeds from the sale will be used to further increase Enbridge’s financial flexibility and to strengthen its balance sheet, while at the same time allowing the company to concentrate its efforts on its core spokes of business.
Enbridge would like to extend its best wishes to the dedicated and experienced teams of Alliance Pipeline and Aux Sable for their success in this new chapter of their operational lives.
