Encana Corporation is selling around 500 kilometres of pipeline and seven gas compression stations ahead of a major reinvestment in the Montney shale, the company announced December 29.
According to a release, the company has sold around $412 million in "natural gas gathering and compression assets" to Veresen Midstream.
The pipeline and compression stations were part of Encana's Cutbank Ridge partnership with Cutbank Dawson Gas Resources, a Mitsubishi subsidiary.
Doug McIntyre, an Encana media relations officer, said the sale of the midstream assets would allow Encana to reinvest upstream in the Montney—in the actual extraction of gas from the ground.
"It frees us up to redirect our capital into our core business, which is upstream production," he said. "Otherwise, that capital would have been required to build that sort of infrastructure in the Montney over the next five years."
Encana plans to invest between US$600 and $700 million in the Montney in 2015. McIntyre said it was too early to say how many jobs that investment would create in the South Peace.
Encana employees will continue to operate the compression stations, which can handle around 675 million cubic feet per day. McIntye said the change in ownership would have "absolutely no staff impacts" on Encana employees.
Veresen plans to invest around $5 billion in midstream facilities "to support development within the Montney," according to the release. It will operate as a partnership with KKR, a private equity firm.
McIntyre said that despite tumbling oil prices, Encana planned to invest more in South Peace gas plays in the coming year.
The Montney is one of Encana's four major resource plays, in addition to the Duvernay in Alberta and the Eagle Ford and Permian in Texas.
Encana diversified its fossil fuel holdings in the past year, meaning Dawson Creek has been largely insulated from the impact falling oil prices have had on the company.
"We've really reshaped our portfolio — we've got oil, we've got natural gas and we've got natural gas liquids," he said. "So having that range of options sort of makes us much more resilient in the face of lower commodity prices."
The companies plan to close the deal in early 2015, pending regulatory approval.
