CALGARY, ALBERTA--March 20, 2003 - Enbridge Inc. today announced
that it has agreed to purchase a further 11.8% interest in the
Alliance Pipeline from affiliates of Duke Energy for
approximately Cdn$203 million, representing 1.1 times the book
value of the interest. Fort Chicago Energy Partners has agreed to
purchase the remaining 11.8% Duke interest in the pipeline for
the same purchase price, with the expected result that Enbridge
and Fort Chicago will each own 50% of the Alliance Pipeline upon
closing of these transactions.
Enbridge and Fort Chicago will also acquire Duke's interest in
the Aux Sable natural gas extraction and fractionation plant and
will assume Duke's support obligation for AC Marketing, for an
aggregate payment from Duke of approximately Cdn$19 million to
each of Enbridge and Fort Chicago. As a result, Enbridge and Fort
Chicago will each own approximately 43% of Aux Sable.
The transactions remain subject to regulatory approvals but are
anticipated to close in late March or early April 2003, except
for a small portion of the U.S. pipeline component which will be
deferred until the fourth quarter.
In conjunction with the purchase, Enbridge intends to lock-in
modest Aux Sable profitability from the newly acquired interest
for a period of two years. In addition, Enbridge and Fort Chicago
have agreed to work towards implementation of a long-term hedging
policy for Aux Sable which will minimize the earnings volatility
of that business.
Patrick D. Daniel, President & Chief Executive Officer of
Enbridge, said, "This purchase fulfills our long-held vision of
acquiring a major interest in Alliance, which we view as a
premier asset, both in terms of its state-of-the-art technology,
favourable tolls and low-cost expansion capability, as well as
its capable management team. We will work with Fort Chicago, our
equal partner, with whom we have a very strong relationship, to
simplify the governance and operational flexibility of Alliance
and pursue a variety of opportunities to enhance the value of
this asset to both shippers and owners."
Mr. Daniel also said, "We expect Alliance to play a significant
role in moving northern gas to market later in the decade. In the
meantime, the steady earnings and cash flow from our increased
ownership are completely in line with our focus on low-risk
pipeline infrastructure investments."
The transaction is immediately accretive to Enbridge and
solidifies expected earnings per share growth for 2003.
The Alliance Pipeline is a 36-inch diameter pipeline with a
capacity of 1,550 million cubic feet per day of natural gas. It
extends 3,000 kilometres from Fort St. John in British Columbia
to Chicago, Illinois. It employs a "high pressure dense phase"
technology to create higher transmission efficiency than
traditional conventional gas transmission systems. Alliance
commenced operations in late 2000. Enbridge was the first
pipeline company to invest in Alliance and, in conjunction with a
number of natural gas producers, seek to develop alternatives for
accessing U.S. markets.
The Aux Sable natural gas liquids plant is located in Chicago,
Illinois, at the outlet of the Alliance Pipeline. It extracts
natural gas liquids to reduce the energy content of the gas to
specifications required by downstream pipelines and natural gas
distributors. The liquids are fractionated into ethane, propane
and butane and sold at market-sensitive prices to a variety of
customers.
AC Marketing holds long-term contracts for 75 million cubic feet
per day of transportation capacity on Alliance Pipeline. This
capacity is used partially to provide transportation service to a
number of upstream producers under term contracts, but primarily
to supply the requirements of the Aux Sable plant for make-up gas
and fuel.
Enbridge Inc. is a leader in energy transportation and
distribution in North America and internationally. 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 international operations and a growing
involvement in the natural gas transmission and midstream
businesses. As a distributor of energy, Enbridge owns and
operates Canada's largest natural gas distribution company, which
provides distribution services in Ontario, Quebec and New York
State; and is developing a gas distribution system for the
Province of New Brunswick. Enbridge employs approximately 4,000
people, primarily in Canada, the U.S. and South America.
Enbridge's common shares trade on the Toronto Stock Exchange in
Canada and on the New York Stock Exchange in the U.S. under the
symbol ENB. Information about Enbridge is available on the
Company's web site at www.enbridge.com.
When used in this news release, the words "anticipate", "expect",
"project", "believe", "estimate", "forecast" and similar
expressions are intended to identify forward-looking statements,
which include statements relating to pending and proposed
projects. Such statements are subject to certain risks,
uncertainties and assumptions pertaining to operating
performance, regulatory parameters, weather and economic
conditions and, in the case of pending and proposed projects,
risks relating to design and construction, regulatory processes,
obtaining financing and performance of other parties, including
partners, contractors and suppliers.
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