4 fast facts about the ‘FedEx of oil pipelines’
Canadian energy transport and distribution company Enbridge and the USA’s Spectra Energy have inked a deal to form a highly significant oil and gas pipeline network. Here’s a whirlwind tour through the key details of the arrangement.
It’s the biggest of its kind
The agreement will see Enbridge purchasing its fellow line operator in an all-stock deal valued at US $28 billion to create the largest energy infrastructure company in North America. It has been hailed the “most significant” energy deal since oil prices crashed in 2014.
It’s mutually beneficial
Both companies have claimed that they will protect dividend growth by combining. This is partially due to the fact that the company will derive a vast majority of its cash flow from take-or-pay contracts with shippers. Under this type of agreement, a company must take an agreed product from a supplier or be forced to pay a penalty, thereby guaranteeing funds to the pipeline operator if oil prices continue to fall.
Once the transaction is complete, Enbridge shareholders are expected to own roughly 57 percent of the combined company, while Spectra shareholders will own the remaining 43 percent. The consideration to be received by Spectra Energy shareholders is valued at US $40.33 per Spectra Energy share.
Al Monaco, the current President and CEO of Enbridge, is to become the CEO of the newly-formed Enbridge Inc. Greg Ebel, Spectra’s acting President and CEO, will become Chairman of the company once the transaction is complete. "Over the last two years, we've been focused on identifying opportunities that would extend and diversify our asset base and sources of growth beyond 2019," Monaco said in a statement.
"We are accomplishing that goal by combining with the premier natural gas infrastructure company to create a true North American and global energy infrastructure leader.”
Hydrostor receives $4m funding for A-CAES facility in Canada
Hydrostor has received $4m funding to develop a 300-500MW Advanced Compressed Air Energy Storage (A-CAES) facility in Canada.
The funding will be used to complete essential engineering and planning, and enable Hydrostor to plan construction.
The project will be modeled on Hydrostor’s commercially operating Goderich storage facility, providing up to 12 hours of energy storage.
Hydrostor’s A-CAES system supports Canada’s green economic transition by designing, building, and operating emissions-free energy storage facilities, and employing people, suppliers, and technologies from the oil and gas sector.
The Honorable Seamus O’Regan, Jr. Minister of Natural Resources, said: “Investing in clean technology will lower emissions and increase our competitiveness. This is how we get to net zero by 2050.”
A-CAES has the potential to lower greenhouse gas emissions by enabling the transition to a cleaner and more flexible electricity grid. Specifically, the low-impact and cost-effective technology will reduce the use of fossil fuels and will provide reliable and bankable energy storage solutions for utilities and regulators, while integrating renewable energy for sustainable growth.
Curtis VanWalleghem, Hydrostor’s Chief Executive Officer, said: “We are grateful for the federal government’s support of our long duration energy storage solution that is critical to enabling the clean energy transition. This made-in-Canada solution, with the support of NRCan and Sustainable Development Technology Canada, is ready to be widely deployed within Canada and globally to lower electricity rates and decarbonize the electricity sector."
The Rosamond A-CAES 500MW Project is under advanced development and targeting a 2024 launch. It is designed to turn California’s growing solar and wind resources into on-demand peak capacity while allowing for closure of fossil fuel generating stations.
Hydrostor closed US$37 million (C$49 million) in growth financing in September 2019.