TransCanada buys Columbia Pipeline

CANADIAN oil, gas and electricity company TransCanada has acquired Columbia Pipeline Group (CPG) in a deal worth US$13bn.

CPG’s assets include a network of approximately 24,000 km of interstate natural gas pipelines extending from New York to the Gulf of Mexico, which will be purchased for US$10.2bn, while TransCanada will also assume the company’s debt worth US$2.8bn.

The deal will extend TransCanada’s pipeline network to approximately 91,000 km across North America, and place the company into the competitive shale market in the US.

TransCanada previously tried to gain approval from the US government to build the Keystone XL natural gas pipeline, in order to allow Canada’s oilsands more access to US Gulf Coast refineries, in a seven-year bid. However, the proposal was finally rejected in November 2015 as the deal was not in line with US climate change policies. The company is currently seeking US$15bn in compensation for the US government’s decision.

Russ Girling, president and CEO of TransCanada said, “The acquisition represents an opportunity to invest in an extensive, competitively-positioned network of natural gas pipelines and storage assets in the shale gas regions.”

CPG is currently planning US$5.6bn worth of long-term commercial expansion projects that are expected to generate earnings in areas TransCanada has had limited scope in until now. They will be due to enter service by 2021.

TransCanada is selling US$7bn worth of assets to finance part of the purchase price with a $4.2bn sale of subscription receipts, and plans to sell its five power generation facilities in the north-eastern US, including the Ravenswood gas and oil-fired plant in New York City, and its gas pipeline stake in Mexico.

The company has yet to disclose whether these sales will result in job losses. The transaction is expected to be completed in the second half of 2016.