Veresen Inc. plans to sell the entirety of its power generation business — roughly 14 per cent of its $4.5 billion asset base — in order to focus on midstream natural gas, according to a report in the Financial Post.
The decision will have an impact the South Peace, where Veresen is a major midstream natural gas player.
The company's subsidiary Veresen Midstream, owns the Saturn natural gas plant near Groundbirch. It announced plans for a $930 million expansion of the plant at the end of 2015.
Additionally, Veresen Midstream announced it would build Western Canada's largest gas plant in decades near Dawson Creek last October at an estimated cost of $860 million. It followed that up by announcing plans for another $715 million processing plant for a site south of Fort St. John. That's a total investment of $2.5 billion in the Peace Region.
"That's more than 25 per cent of the largest public infrastructure project in the province's history — the Site C dam — just a half an hour outside Dawson Creek and you hear nothing about it," Dawson Creek Mayor Dale Bumstead said. "When you see the kind of investment that companies like Veresen are making into the midstream (natural gas) processing, it's an indicator of how big the Montney (shale basin) is in terms of potential. It's a big-time impact on our community."
All of the company's gas processing plants will make use of existing TransCanada NOVA Gas Transmission pipelines while also utilizing agreements with the Encana-led Cutbank Ridge Partnership.
"When Veresen signed that deal with Encana, that was a big signal to me that they were serious about getting into the midstream processing business," Bumstead said.
Veresen Inc. CEO Don Althoff told shareholders and analysts on a conference call announcing second quarter results that the company decided to sell its power generation facilities because it does not believe it will offer returns that can compete with its midstream natural gas assets.
The company owns 12 power generation assets across Canada, producing about 625 megawatts of energy.
Veresen has plans to build a US $6 billion liquefied natural gas (LNG) export facility on the Oregon coast. The Jordan Cove LNG project was denied approvals by the U.S. Federal Energy Regulatory Commission (FERC) in March, citing lack of committed shippers.
But in the weeks following that decision, Veresen signed a 20-year sales agreement for 25 per cent of Jordan Cove's proposed 6 million tonnes per year output with the world's largest LNG buyer: JERA Co. Inc.; a joint venture of the Tokyo Electric Power Company and Chubu Electric Power Co. Inc.
Veresen has since moved for a re-hearing on the project from FERC and is still waiting for the regulator's final decision.
The export facility would be an outlet for natural gas produced in the B.C. Montney shale gas basin.
Veresen Inc. was not immediately available for comment.
dcreporter@dcdn.ca
