Enbridge Inc. (TSX:ENB) (NYSE:ENB) announced today that it has entered into a midstream services relationship with Encana Corporation (TSX, NYSE: ECA) to develop gas gathering and compression facilities in the Peace River Arch ("PRA") region in northwestern Alberta. Enbridge has agreed to acquire from Encana certain gathering and compression facilities in the PRA region currently in service and under construction, with an expected closing date in December 2012. Following the completion of construction of these facilities in 2013, Enbridge's total investment in the PRA region is expected to be approximately $264 million. The financial terms of the midstream services agreement for the gathering and compression facilities in the PRA region will parallel previously established terms between Enbridge and Encana reached in 2011. Enbridge is also working exclusively with Encana on facility scoping for further development of additional major midstream facilities in this region.
Enbridge also announced today it has agreed with the other owners of the Cabin Gas Plant development to defer the commissioning of Cabin Phase 1 and construction of Cabin Phase 2. Starting in December 2012, Enbridge will begin receiving fees for its investment made to date in the Cabin Gas Plant, including costs expended on Phase 2 of the plant facilities. Enbridge will retain the right to develop, own and operate all major midstream natural gas processing facilities required by Encana in the Cabin facility. Enbridge expects its investment in the Cabin and PRA region will exceed the previous level of capital committed to Cabin Phases 1 and 2.
"This agreement in the Peace River Arch region represents another step in the execution of our strategy to establish a strong position in the Canadian Midstream business," said Leon Zupan, President, Gas Pipelines Enbridge Inc. The investment extends our footprint to the Peace River Arch region, which is expected to grow significantly in the years to come, under the same attractive commercial underpinning and return as our original Cabin investment. The PRA region is also in close proximity to the Alliance Pipeline. We are pleased to be extending our relationship with Encana and look forward to working with producers and all stakeholders in this region."