Enbridge selling B.C., Alberta gas processing network

Enbridge selling $4.3 billion worth of natural gas assets in B.C, Alberta

A flight of capital from Canada’s oil and gas sector appeared to continue Wednesday, but this time the company doing the selling is a Canadian company, not an international energy giant.

Enbridge Inc. (TSX: ENB) announced July 4 that it is selling its natural gas gathering and processing network in B.C. and Alberta to Brookfield Infrastructure (NYSE,TSX: BIP) for $4.3 billion.

The sale includes 19 natural gas processing plants and gathering pipeline systems in northeastern B.C. and in Alberta, which Enbridge collectively calls its G&P business unit. Those processing plants serve the Montney, Peace River Arch, Horn River and Liard basins of B.C. and Alberta.

Jihad Traya, a natural gas analyst with Solomon Associates, does not see the sale as part of a greater flight of capital by oil and gas companies. He points out that it's not a complete retreat from Canada, as the company plans to keep its Westcoast natural gas pipeline, which stretches from the Yukon, Northwest Territories and northern Alberta to the Lower Mainland, where it supplies Fortis BC with gas.

It is also retaining its Alliance pipeline, which runs from Western Canada to Chicago.

"These are not the crown jewels of Enbridge," Traya said. "It's not an exit. They still retain the Spectra-Westcoast system and the Alliance. By no means is this a sign of exit. I think it's just Enbridge had an opportunity to clean up a balance sheet and reposition itself."

According to Enbridge, Brookfield plans to keep the Canadian G&P workforce.  Enbridge president Al Monaco said the divestment was part of a company strategy to become a pure play pipeline company.

"When combined with asset monetizations announced in May, the sale of our Canadian G&P business significantly advances our strategic priority of moving to a pure play regulated pipeline and utility business model," Monaco said in a press release.

Enbridge is also trying to reduce its debt, which ballooned when it merged with Spectra Energy in 2016. The company is also now focused on its $7 billion Line 3 replacement project, which just received approval from the Minnesota Public Utilities Commission on July 2.

Enbridge spent roughly $500 million trying to get its Northern Gateway pipeline through B.C. approved, only to have it killed by the Trudeau government. However, the Trudeau government did approve the Canadian segment of Enbridge's Line 3 replacement project.

nbennett@biv.com

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