PACIFIC NORTHERN Gas (PNG) shareholders are to receive another cash benefit resulting from the sale earlier this year of its 50 per cent interest in a planned natural gas pipeline to feed the Kitimat LNG export terminal project.
Shareholders of record as of June 6 are to receive $3 a share, amounting to $11 million, part of the net remaining proceeds of an initial $30 million payment made to PNG by Apache Canada and EOG Resources, giving them full control of the Pacific Trails Pipeline project.
Shareholders in March received $3 share from the same sale.
PNG sold its share in the pipeline for $50 million in total – the final $20 million will be paid to PNG when the Pacific Trails pipeline/project is officially announced. That’s expected to happen later this year.
The $6 per share dividends represents the total net proceeds arising from the $30 million payment. Expenses included $4 million in bonuses to company executives, $2.6 million for taxes and $1.2 million in advisory fees.
PNG official Craig Donohue said there had been discussion about using some of the first $30 million to continue an expansion into renewable energy projects but that the company’s board decided it could accomplish that within its existing resources.
“We have sufficient resources available, sufficient wherewithal,” said Donohue.
PNG is already a partner with a company called Skookum Power Corporation in a run-of-river hydro-electric project on the Sunshine Coast and has formed a new partnership with Skookum to buy into a second promising run-of-river project near Sechelt, also on the Sunshine Coast.
The project would cost approximately $190 million and the PNG partnership with Skookum could see it providing $20 million of that amount.
Depending upon the timing of the Pacific Trails announcement, the final $20 million could come available when the $20 million is required for the Narrows Inlet run of river project, said Donohue.
And although PNG has sold its half-interest in the Pacific Trails Pipeline, it does have a long-term contract to operate and maintain the pipeline, providing revenue it says will help decrease those higher costs now being borne by its other customers.
PNG’s northwestern customers have been through several years of double-digit price increases because they’ve had to shoulder more of the burden of maintaining PNG’s system because it has lost many large industrial users.
PNG is receiving option payments on another proposal to transport gas through its existing system. If that contract is ever exercised, rates could drop again.