A new joint venture formed between Enbridge Energy Partners (EEP) and Marathon Petroleum has purchased a stake in the Bakken Pipeline System.
EEP said that the new joint venture has entered into an agreement to acquire a 49 percent equity interest in the holding company that owns 75 percent of the Bakken Pipeline System.
The stake was purchased from an affiliate of Energy Transfer Partners and Sunoco Logistics Partners.
Under this arrangement, EEP will indirectly hold 75 percent of the joint venture’s 49 percent interest in the holding company and Marathon will hold 25 percent.
The purchase price of EEP’s effective 27.6 percent interest in the system is $1.5 billion.
Closing of the transaction is subject to certain conditions, and is expected to occur in the third quarter of 2016.
The Bakken Pipeline System consists of the Dakota Access Pipeline (DAPL) and the Energy Transfer Crude Oil Pipeline (ETCO) projects.
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 Energy Partners said.
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 barrels per day of crude oil and has the potential to be expanded to 570,000 bpd.
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, EEP said.
Both DAPL and ETCO are expected to be ready for service by the end of 2016.
EEP said it intends to enter into a bridge financing arrangement with Enbridge (U.S.) Inc., a wholly owned subsidiary of the company, to fund EEP’s $1.5 billion investment at closing.
Upon closing the transaction, EEP and Marathon Petroleum plan to terminate their transportation services and joint venture agreements for the Sandpiper Pipeline Project.
“The pipelines offer competitive tolls, a significant level of long-term take-or-pay commitments from high credit quality customers, and strong risk-adjusted returns…. The investment is expected to be immediately accretive to distributable cash flow when the pipeline projects come into service, which we expect will occur by the end of 2016,” EEP president Mark Maki said.