Encana to sell Colorado gas plant

By OGJ editors
HOUSTON, Jan. 18
-- Encana Oil & Gas (USA) Inc., subsidiary of Encana Corp., Calgary, will sell its Fort Lupton natural gas processing plant in Colorado to Western Gas Partners LP, Houston, for about $303 million.

The Fort Lupton plant processes about 84 MMcfd and lies about 30 miles northeast of Denver. Included in the deal are five gathering pipeline systems and associated compression. Also as part of the transaction, Encana USA has negotiated gas processing fees that allow the company to continue extracting about 3,500 b/d of NGL from its processed natural gas.

The Encana announcement also said the agreement provides “long-term gathering and processing cost stability” for the company’s ongoing gas development in the Denver-Julesburg basin.

The sale announcement is related to Encana’s recently issued request for companies to bid on buying and completing construction on the Cabin gas plant in British Columbia. That plant has regulatory approval for two phases of development for total processing capacity of 800 MMcfd.

Encana, as operator, is building it to serve producers in the Horn River play in northeast BC. The Cabin plant is in the early stage of first-phase construction, designed to be able to process about 400 MMcfd, and is scheduled to start up in 2012.

Encana expects the Fort Lupton plant sale and the midstream divestiture of the Cabin plant, all of which is subject to certain regulatory approvals and customary closing conditions, to close in first-quarter 2011. Encana USA has owned and operated Fort Lupton since 2000 when one of its predecessor companies acquired the plant as part of a larger acquisition of exploration and production assets.

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