Enbridge and Marathon Petroleum buy Bakken pipeline stake for $2-billion – backgrounder
Two stories in this post.
Enbridge, Marathon Petroleum buy Bakken pipeline stake for $2-billion
Calgary — The Globe and Mail
Published Tuesday, Aug. 02, 2016 9:12PM EDT
Last updated Wednesday, Aug. 03, 2016 8:36AM EDT
Enbridge Inc. and Marathon Petroleum Corp. have formed a new joint venture to buy 37 per cent of the Bakken pipeline project from Energy Transfer Partners, L.P. and Sunoco Logistics Partners L.P. for $2-billion (U.S.).
Calgary-based Enbridge announced late Tuesday that the partnership that operates the U.S. portion of its oil pipeline network, along with Marathon, will acquire a 49-per-cent equity interest in the holding company that owns 75 per cent of the Bakken pipeline. The deal means Enbridge Energy Partners, L.P., a wholly owned subsidiary of Enbridge, will acquire a 27.6-per-cent interest in the system for $1.5-billion.
Given public opposition to new liquids pipelines, midstream companies such as Enbridge have increasingly focused on infrastructure already in the ground.
“This acquisition is an attractive opportunity to participate in a pipeline system that will transport crude oil from the prolific Bakken formation in North Dakota to markets in eastern PADD II and the U.S. Gulf Coast, providing another important link in our market access strategy that is driven by improving netbacks and access to the best markets for our customers,” Mark Maki, president of Enbridge Energy Partners, said in a news release.
The Bakken system consists of the Dakota Access pipeline and the Energy Transfer Crude Oil pipeline projects. Phillips 66 Co. owns the other 25 per cent in each pipeline project. The transaction is expected to close in the third quarter of 2016.
Upon the successful closing of the deal, Enbridge Energy Partners and Marathon plan to terminate their transportation and joint-venture agreements for the yet-to-be-built $2.6-billion, 991-kilometre Sandpiper pipeline – which would have transported Bakken light crude from North Dakota to Wisconsin.
“The scope and timing of the Sandpiper pipeline project will be evaluated during the quarter to ensure that it is positioned to meet the growing need for pipeline capacity while offering customers competitive tolls and strong netbacks,” the news release from Enbridge said.
Enbridge/Marathon terminate Sandpiper JV, buy interest in Bakken Pipeline: 13 things to know
By Deborah Jaremko
Aug. 3, 2016, 7:25 a.m.
Enbridge Energy Partners (EEP) and Marathon Petroleum Corporation have formed a new joint venture giving the companies a 49 percent interest in the new Bakken Pipeline System. Upon successful closing of the transaction, EEP and Marathon also plan to terminate their transportation services and joint venture agreements for the proposed Sandpiper Pipeline Project.
Sandpiper will be evaluated during the quarter to ensure that it is positioned to meet the growing need for pipeline capacity while offering customers competitive tolls and strong netbacks, Enbridge says.
Here are 13 stats about the new deal.
- The purchase is from an affiliate of Energy Transfer Partners and Sunoco Logistics Partners.
- Under the agreement, EEP and Marathon would indirectly hold 75 percent and 25 percent, respectively, of the joint venture’s 49 percent interest in the holding company of Bakken Pipeline.
- The purchase price of EEP’s effective 27.6 percent interest in the system is US$1.5 billion.
- The system consists of the Dakota Access Pipeline (DAPL) and the Energy Transfer Crude Oil Pipeline (ETCO) projects.
- Both DAPL and ETCO are expected to be ready for service by the end of 2016.
- Phillips 66 owns the other 25 percent in each pipeline project.
- Both the DAPL and ETCO projects are highly contracted and secured by long-term take-or-pay contracts with creditworthy counterparties, Enbridge says.
- DAPL is a new 30-inch diameter pipeline from the Bakken/Three Forks production area in North Dakota to market centers in Patoka, Illinois.
- DAPL is expected to initially deliver in excess of 470,000 bbls/d and has the potential to be expanded to 570,000 bbls/d.
- The pipeline has six origin locations in North Dakota and delivers to Patoka. The construction of terminals began in January 2016, mainline pipeline construction began in May 2016, and all major materials and equipment have been procured.
- ETCO, formerly one of the Trunkline pipelines, is a converted natural gas pipeline from Patoka to the Sunoco Terminal in Nederland, Texas. The pipeline consists of 62 miles of new 30-inch diameter pipe, 686 miles of converted 30-inch diameter pipe, and 40 miles of converted 24-inch diameter pipe.
- Construction of the new pipe began in April 2016. Both the pipe conversion and the pump stations are over 90 percent complete.
- With the termination of the Sandpiper joint venture agreements with Marathon, EEP will retain 100 percent ownership in its legacy North Dakota system, which is one of the most competitive outlets available to producers in the state, Enbridge says.