Taylor NGL Limited Partnership is investing $80 million in natural gas pipelines in Alberta and says it will likely boost cash distributions.
Taylor said it will buy an existing pipeline for $25 million from Nova Chemicals Corp. of Pittsburgh and will pay $55 million for a proposed pipeline that Nova will operate. The existing Alberta ethylene pipeline runs from Joffre between Calgary and Edmonton, to various ethylene-consuming and storage points in Alberta.
A proposed new pipeline will transport natural gas liquids (NGL) from Fort Saskatchewan to Nova’s Joffre petrochemical plant. It will be 100-per-cent owned by Taylor (TAY.UN-TSX). Construction on the pipeline, which has already received the necessary regulatory approvals, is set to begin this summer.
Taylor, which holds major stakes in the Younger, B.C., extraction plant, a Joffre ethane extraction plant and three interconnected gas processing plants in southeastern Alberta, estimated the new pipelines will result in approximately a 10-per-cent increase in cash available for distributions per unit. The partnership intends to fund the transaction through a combination of debt and equity.
Taylor is a Western Canadian-based partnership that owns and operates NGL extraction plants and natural gas processing assets.
“As one of the largest producers of natural gas liquids in Western Canada, moving into transportation and terminalling of these products is a natural extension of Taylor’s business,” said Bob Pritchard, president of Taylor. “This acquisition adds a high-quality, long-life, stable revenue stream to the partnership that results in the further growth of distributions to Taylor's unitholders.”
Nova chief executive Jeffrey Lipton said the sale of the pipeline assets was part of the company’s strategy to monetize “non-strategic infrastructure assets.”
Nova (NCX-TSX) produces ethylene, polyethylene, styrene monomer and styrenic polymers, used to make a wide range of consumer and industrial goods.
