Enbridge Inc (TSX: ENB) is expanding its natural gas assets. The firm this morning revealed it would be acquiring FortisBC Midstream, which holds natural gas assets in Fort St. John, British Columbia.
The transaction will see Enbridge pay $400 million for the subsidiary of FortisBC Holdings, which owns a 93.8% stake in the Aitken Creek Gas Storage facility, and 100% interest in the Aitken Creek North Gas Storage facility.
Commenting on the acquisition, Executive VP of Enbridge Cynthia Hansen stated, “Enbridge is pleased to acquire Aitken Creek Storage, a well-located and connected facility that will enable us to continue to meet regional energy needs as well as support increasing demand for west coast LNG exports.”
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Collectively referred to as Aitken Creek Storage, the facility amounts to an underground reservoir found 120 kilometres north of Fort St John. The facility has the capacity to hold 77 billion cubic feet of natural gas.
The significance of the asset is that it is the only storage facility connected to three major natural gas transport lines, including Alliance pipeline, which Enbridge has a 50% ownership stake in along with Pembina Pipeline, and the Westcoast pipeline, which Enbridge wholly owns. Enbridge refers to the asset as an “integral part of the natural gas transmission system in Western Canada.”
Fortis originally acquired the Aitken Creek Storage facility in 2016, after entering a transaction with Chevron in December 2015, wherein they agreed to pay US$266.2 million to acquire the assets. At the time of the acquisition, Fortis indicated that the purchase made sense as they leased a third of the available storage capacity, with the facility enabling them to expand their gas infrastructure within the province.
The figure paid in 2016 amounts to an estimated $361.6 million in Canadian dollars, meaning Fortis saw the value of the asset improve $38.4 million over the course of seven years.
The transaction is expected to close sometime in 2023.
Enbridge last traded at $39.76 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
