New pipeline entity emerges in Calgary

Canadian energy company Husky said Monday it closed on the transactions necessary to set up a pipeline company in Alberta and Saskatchewan.

Part of Husky's business plan includes the partial sale of some of its heavy oil properties and the $163 million in cash considerations for the sale of royalty assets in Western Canada, which for Husky represents about 1,600 barrels of oil equivalents in production. Additional agreements are in place for the sale of oil and gas assets in Alberta and Saskatchewan, which will bring in about $900 million in cash for the 20,600 barrels of oil equivalent in daily production.

The company said Monday it received about $1.3 billion from a new transaction that established a limited partnership for midstream, or transit, assets in Alberta and Saskatchewan. The company said the new business entity could help with the development at least eight new oil projects using thermal energy to assist with production.

Assets include around 1,200 miles of pipeline and 4.1 million barrels of oil storage capacity. Partners in the new entity include Cheung Kong Infrastructure Holdings Ltd., a company with headquarters in Hong Kong.

Husky entered the decade with a program designed to focus more on projects with a longer shelf life and lower operating costs. With a 2016 objective of establishing a stronger foundation in an era of market volatility, the company said more than 40 percent of its production this year will come from low-cost projects, compared with just 8 percent in 2010.

The new limited partnership will be based in Calgary.