Canadian gas giant Encana to sell two gas plants to Veresen for $920 mn

Canadian gas giant Encana Corp yesterday said that it will sell its two gas-processing plants in Alberta and British Columbia to Veresen Inc for $920 million, the last major divestiture the company had planned to make this year.

Encana said that it has so far made divestures worth C$3.5 and this would be the last in 2011 as the second-largest North American natural gas producer after Exxon Mobil had put its assets for sale this year due to falling natural gas prices in North America.

Calgary-based Encana has also been under pressure to sell assets after its proposed $5.4-billion joint venture deal with PetroChina to develop northeast British Colombia's shale gas plays fell apart in June this year.

The two gas processing plants being sold to Veresen are located in the Cutbank Ridge region of Alberta and British Columbia. Natural gas and natural gas liquids in the region are produced from the prolific Montney, Cadomin and other geological formations.

The Hythe-Steeprock complex includes two natural gas processing plants with combined functional capacity of 516 MMcf/d as well as approximately 40,000 hp of compression and 370 km of gas gathering lines. The Hythe plant processes both sour and sweet natural gas, while the Steeprock plant is a sour gas processing facility.

Veresen and Encana have entered into a long-term deal under which Encana will supply the plants with natural gas and Veresen will operate the two plants after a transition period.