Kinder Morgan on Wednesday acquired Oklahoma-based Hiland Partners, a private partnership controlled by Continental Resources CEO Harold Hamm, for $3 billion, marking Kinder’s entrance into the Bakken play.
The deal includes Hiland’s crude oil and gas gathering systems in North Dakota and Montana consisting of 1,225 miles of crude pipelines and 1,800 miles of gas gathering pipelines.
The crude oil gathering systems will have more than 1.8 million acres dedicated under long-term, fee-based agreements with major Bakken oil producers.
Houston-based Kinder Morgan will also acquire the 485 miles long Double H crude pipeline that’s expected to go online next month.
The Double H runs from North Dakota to Cushing, Oklahoma and will have an initial capacity of 84,000 barrels per day, with an expansion to 108,000 barrels per day in 2016.
The pipeline has firm take-or-pay contracts for 60,000 barrels per day and is currently conducting an open season for additional commitments.
Oklahoma-based Continental Resources will be Hiland’s largest oil gathering customer with the majority of its Bakken acreage feeding Hiland’s gather systems under a long term agreement.
Kinder Morgan said it will retain nearly all of Hiland’s current 430 employees.
“We are delighted to establish a substantial midstream footprint in one of the most prolific oil producing basins in the United States,” said KMI Chairman and CEO Richard Kinder.
The deal is expected to close in the first quarter of 2015.