Canada's Veresen Sells Power Business to Help Fund Natgas Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Canadian midstream company Veresen Incorporated (TSX:VSN) (Calgary, Alberta) says the sale of its power generation assets will help fund $1.4 billion in contracted natural gas and natural gas liquids (NGL) capital projects. Veresen is selling its power generation assets in three separate packages. Industrial Info is tracking $7.65 billion in active Veresen projects.

Veresen announced Tuesday it will sell the power generation assets for $1.18 billion. It expects to close on the transactions in the second quarter of 2017. One of the buyers is Capital Power Corporation (TSX:CPX) (Edmonton, Alberta), which announced it plans to acquire Veresen's thermal power business, consisting of two gas-fired generation facilities and two waste-heat assets.

Veresen Chief Executive Officer Don Althoff said, "The $1.4 billion of contracted capital projects in our core natural gas and NGL infrastructure business is now fully funded with no need to access the capital markets, ensuring that top line growth translates into per share metrics."

Veresen's budget for just this year includes a capital program of about $500 million to $550 million.

Industrial Info is tracking two large natural gas-processing projects that are under construction in British Columbia: the $715 million Tower cryogenic natural gas plant near Taylor, and the $700 million Saturn plant near Dawson Creek. Veresen expects both facilities to be in service by the end of 2017. Together, they will add 600 million cubic feet per day of processing capacity, more than doubling the capacity of subsidiary Veresen Midstream. For more information, see Industrial Info's project reports on the Tower and Saturn projects. For related information, see December 6, 2016, article - Veresen Sees Plenty of Spending Opportunities in 2017.

Another project that Veresen continues to pursue is the 6 million-metric-tonne-per-year Jordan Cove liquefied natural gas (LNG) plant and terminal project in Coos Bay, Oregon. Valued at more than $6 billion, the project received a setback late last year when the U.S. Federal Energy Regulatory Commission (FERC) rebuffed Veresen's request for a rehearing for permission to construct the export project. The request to construct the plant and the accompanying 232-mile Pacific Connector natural gas pipeline, which was to be built by Williams Partners LP (NYSE:WPZ) (Tulsa, Oklahoma), was originally denied permission by FERC in March 2016 on the grounds that Williams and Veresen failed to demonstrate that the pipeline's benefits would outweigh "adverse effects on landowners," and without the pipeline, the Jordan Cove export terminal could provide no benefit to the public. For more information, see December 13, 2016, article - FERC Snubs Rehearing for Oregon LNG Terminal.

Undeterred, the project developers said they would refile the project application, and on February 10, FERC approved Jordan Cove LNG's pre-filing application, clearing the way for the export project to move through the federal permitting process, according to the developers.

"We have invested more than a decade in optimizing the engineering design and minimizing our environmental footprint through scientific analysis and community feedback," Betsy Spomer, chief executive officer of Jordan Cove LNG, said in a press statement. "We are confident Jordan Cove will receive regulatory approval and contribute significant direct and indirect benefits to southern Oregon."

For more on the Jordan Cove project, see Industrial Info's project report.

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