A hidden value in CKE
A follow up on that news item, a week or so ago, about Cheniere, the Gulf Coast gas exporter, being in talks with Montney gas producers for deals to feed its liquefaction facilities.
A prominent feature on any map of CKE’s Birely / Umbach holdings is an unused 12” pipeline.
CKE acquired this 55 kilometer 12 inch line in 2014 from Nuvista. It intersects its Birley/Umbach lands and then crosses third party lands being actively developed by other Montney operators - Black Swan, Progress, Storm, Painted Pony and CNRL are all in the neighborhood. It terminates at the Aitken Creek gas storage facility where there is a meter station. The pipeline is capable of being connected to the Alliance pipeline, the Westcoast system or the proposed NGTL North Montney line.
The Alliance pipeline terminates in Chicago but gas can be shipped on to the Gulf Coast through an existing network of pipelines. Despite the distance, Anatol Feygin, CCO of Cheniere told a conference in Houston
“I guarantee you I can land that AECO gas in the Gulf Coast cheaper than they can move that AECO gas to the West Coast … Once you get past a certain amount, and new infrastructure is built, it gets a little fuzzier. But today, no question.”
Today a 12” pipeline would cost roughly CAD $400,000 a kilometer- putting the replacement cost of this CKE pipeline at about CAD $22 million plus a lot of paperwork to get the permits.
Maybe there is some hidden value here ………..