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PAN-ALBERTA GAS LTD. COMPLETES COMPREHENSIVE SETTLEMENT PACKAGE WITH PANHANDLE EASTERN PIPELINE COMPANY

PAN-ALBERTA GAS LTD. COMPLETES COMPREHENSIVE SETTLEMENT PACKAGE WITH
 PANHANDLE EASTERN PIPELINE COMPANY
 CALGARY, Oct. 01 /CNW/ - Mr. G.W. (Scotty) Cameron, President & Chief Executive Officer of Pan-Alberta Gas Ltd. ("Pan-Alberta") today announced that a Memorandum of Understanding ("Settlement") has been signed between Pan-Alberta and Panhandle Eastern Pipeline Company of Houston, Texas ("Panhandle"), whereby Pan-Alberta will receive from Panhandle a US $60 million (CDN $73 million) settlement payment which includes the value of the Panhandle linepack on Northern Border Pipeline and its wholly-owned subsidiary, Pan-Alberta Gas (U.S.) Inc. ("PAGUS"), will assume all of Panhandle's rights and obligations under Panhandle's purchase contract with Northwest Alaskan Pipeline Company of Salt Lake City, Utah ("Northwest Alaskan").
 Northwest Alaskan, owned by The Williams Companies of Tulsa, Oklahoma, is a company formed, among other things, to facilitate the purchases of Canadian natural gas through the "Pre-Build" portion of the Alaskan Natural Gas Transportation System.
 Pan-Alberta will receive from Panhandle the US $60 million (CDN $73 million) cash payment as part of a comprehensive settlement package. In addition, PAGUS will assume all rights and obligations under Panhandle's Transportation Agreement with Northern Border Pipeline Company of Omaha, Nebraska ("Northern Border") for 150 MMcf/day. PAGUS will also be able to assume Panhandle's transportation rights and obligations on the pipeline system owned by Natural Gas Pipeline Company of America of Chicago, Illinois ("Natural") and will have an option to obtain transportation capacity on Panhandle's pipeline system.
 The Settlement will replace the basic agreement between Panhandle, Northwest Alaskan and Pan-Alberta which was put in place in 1978 as part of the sales contracts for the East Leg Pre-Build of the Alaskan Natural Gas Transportation System. At the time of the signing of the 1978 contractual arrangements, Panhandle was a U.S. purchaser and marketer of natural gas with annual sales exceeding 600 Bcf a year. However, due to market changes arising from the deregulation of the U.S. natural gas industry, Panhandle's overall sales volumes have declined precipitously over the last several years. This decline resulted in disputes under the Contract which culminated in an arbitration proceeding between Pan-Alberta and Panhandle in January 1992 to establish the pricing and purchase obligations of Panhandle. The arbitration decision did not end the potential for further dispute and accordingly, Pan-Alberta and Panhandle have reached this mutually agreeable Settlement.
 Mr. Cameron noted that the Settlement is subject to the approval of Pan-Alberta producers prior to receiving the necessary U.S. and Canadian regulatory and governmental approvals.
 "We are extremely positive about this new arrangement", Mr. Cameron noted. "It will provide stability on the East Leg of the Pre-Build, assure Pan-Alberta producers of continued access to what we see as a strengthening U.S. Midwest gas market and set a framework to proceed with long-term gas supply, transportation and market planning".
 From the point of view of Pan-Alberta producers, the new arrangement will:
 1. Allow essentially full sales of 150 Mmcf/d under the new Pan-
 Alberta - Northwest Alaskan Sales Contract
 It is expected that the new arrangement will result in sales
 under the contract approaching 100 percent, assuring the Pan-
 Alberta producers continued high rates of take under their gas
 supply contracts.
 2. Assures continued transportation access
 The arrangement assures Pan-Alberta producers of continued
 access to pipeline capacity to the U.S. midwest gas market at
 a time when pipeline capacity is the key to export markets.
 3. Provides transportation access to new market areas
 Under the Settlement, Pan-Alberta will have access to firm
 transportation to Harper, Iowa and, as required, on Natural's
 system to Tuscola, Illinois, or other points, subject to
 satisfactory transportation arrangements. As well, the option
 to obtain transportation on Panhandle's system serving the
 Great Lakes area will provide additional marketing oppor-
 tunities. Holding firm transportation service in the U.S. on
 these pipelines will be the cornerstone in obtaining long-term,
 firm customers in the U.S. for Pan-Alberta producers.
 4. Reinforces the continuity of the overall Alaskan Natural Gas
 Transportation System
 The Settlement reinforces the continuation of the Pre-Build
 arrangements, along with the regulatory and governmental
 provisions now in place both in Canada and the U.S.
 5. Panhandle provides credit support on Northern Border
 Panhandle will provide the requisite Northern Border credit
 support, eliminating the requirement for Pan-Alberta producers
 to provide a costly credit support package to maintain firm
 transportation service on Northern Border.
 6. The Settlement provides Pan-Alberta producers with cash
 payments over a three year period totalling approximately
 CDN $76 million inclusive of interest and the value of the
 Panhandle linepack on Northern Border.
 7. Avoids costly and uncertain litigation
 The Settlement will eliminate the prospect of lengthy, uncertain
 and costly litigation between Panhandle and Pan-Alberta.
 8. Stabilizes the regulatory environment
 The Settlement will remove Panhandle's Prebuild supply and
 capacity from the uncertainties of the FERC 636 and 636A
 restructuring process, and thus will provide for a more stable
 regulatory environment for the Prebuild project.
 "We have already started working with all parties involved to put the necessary agreements and approvals in place as quickly as possible to achieve a Settlement closing on October 31, 1992." Mr. Cameron continued, "these parties include Northern Border, Foothills, NOVA, and U.S. and Canadian governmental and regulatory agencies".
 "As I've stated, we are extremely pleased with the Panhandle Settlement. It provides Pan-Alberta with the solid opportunity of replacing Panhandle with other U.S. purchasers in new market areas who have a requirement and desire for secure, long-term supplies of Canadian natural gas."
 For further information: G.W. Cameron, (403) 234-6677, or; D.A. Dawson, (403) 234-6630, or; W.J. Rousch, (403) 234-6665
 -0- 10/01/92


CO: PAN-ALBERTA GAS LTD. IN: OIL ST: -- c0068 -- X007 10/01/92
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Date:Oct 1, 1992
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