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.