CALGARY, ALBERTA--(Marketwire - Oct. 7, 2011) - Enbridge Inc. (TSX:ENB) (NYSE:ENB) announced today that it has reached agreement with Encana Corporation (TSX, NYSE: ECA), on behalf of certain co-owners of the Cabin Gas Plant Development (collectively the "Selling Owners"), whereby Enbridge will become the majority owner in the Cabin Gas Plant Development located 60 kilometers northeast of Fort Nelson, British Columbia in the Horn River Basin.
Under the terms of the Asset Purchase and Sale agreement, Enbridge will acquire a 57.6% interest in Phases 1 and 2 of the Cabin Gas Plant Development which together will be capable of processing 800 million cubic feet per day (Mmcf/d) of natural gas. Upon completion of Phases 1 and 2, Enbridge's total investment is expected to be approximately $900 million.
Phase 1 of the development will have 400 Mmcf/d of natural gas processing capacity. The plant is currently under construction and is expected to be in-service in the third quarter 2012. Phase 2 will add an additional 400 Mmcf/d of capacity and has been sanctioned by producers and received regulatory approval. The Phase 2 plant is expected to be ready for service in the third quarter 2014. Capacity for both Phases 1 and 2 has been fully taken up by Horn River producers.
"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, Gas Pipelines, Green Energy & International. "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.
"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. The investment also comes with substantial growth potential from future development of phases 3 through 6."
Mr. Monaco added, "This investment once again demonstrates Enbridge's ability to work with producers to strengthen the competitiveness of the Western Canadian Sedimentary Basin by providing cost-effective energy infrastructure. We are very pleased to be part of the Cabin development and look forward to working with all producers and communities in the region."
With gas in place estimated at between 400 to 550 trillion cubic feet, the Horn River natural gas play is one of the most prolific in North America. The region requires new gas infrastructure to enable producers to realize the full potential of the basin. The Cabin Gas Plant Development provides an industry solution to ensure scalable processing capacity to accommodate future growth and to minimize the infrastructure footprint in the region. The entire development has the potential to include up to six phases with an ultimate capacity of 2.4 billion cubic feet per day.
The transaction would involve payment by Enbridge to the Selling Owners of approximately $250 million at the expected transaction closing date in December 2011. Closing of the transaction is subject to normal closing conditions.
Enbridge and the Selling Owners have reached agreement on the terms of a long-term Midstream Services Agreement (MSA) whereby the Selling Owners have provided a long-term take-or-pay throughput commitment for their pro-rata share of Phase 1 and 2 plant capacity. Under the MSA, the Selling Owners may elect to extend the term of the agreement and request expansions of the Cabin Gas Plant Development. Enbridge will expand the plant facilities under agreed terms and subject to certain conditions.
Enbridge will become the Operator when the Phase 1 plant goes into service. As Operator, Enbridge will be responsible for plant operations and expansions. The non-selling owners will continue to fund the remaining 42.4% investment in the Cabin Gas Plant Development and have the right to utilize their pro-rata share of plant capacity. Enbridge may acquire additional ownership interests in the Cabin Gas Plant Development.
About Enbridge Inc.
Enbridge Inc., a Canadian company, is a North American leader in delivering energy and one of the Global 100 Most Sustainable Corporations. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world's longest crude oil and liquids transportation system. The Company also has a significant and growing involvement in natural gas gathering, transmission and midstream businesses. As a generator of energy, Enbridge has interests in close to 860 megawatts of renewable and green energy generating capacity and is expanding its interests in wind and solar energy, geothermal and hybrid fuel cells. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. Enbridge employs approximately 6,400 people, primarily in Canada and the U.S. and is ranked as one of Canada's Greenest Employers, and one of the Top 100 Companies to Work for in Canada. Enbridge's common shares trade on the Toronto and New York stock exchanges under the symbol ENB. For more information, visit www.enbridge.com.
Certain information provided in this news release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Although Enbridge believes that these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a variety of risks and uncertainties pertaining to operating performance, regulatory parameters, weather, economic conditions and commodity prices. You can find a discussion of those risks and uncertainties in our Canadian securities filings and American SEC filings. While Enbridge makes these forward-looking statements in good faith, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. Except as may be required by applicable securities laws, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
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