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Agreement to sell 36.75% interest in Bakken pipeline for US$2 billion in cash

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World Pipelines,

Energy Transfer Partners, L.P. (ETP) and Sunoco Logistics Partners L.P. have announced they have signed an agreement to sell 36.75% of the Bakken Pipeline Project, which includes the Dakota Access pipeline and the Energy Transfer Crude Oil pipeline, to MarEn Bakken Company LLC (MarEn), an entity jointly owned by Enbridge Energy Partners, L.P. and Marathon Petroleum Corporation (MPC), for US$2 billion in cash.

The sale is expected to close in the third quarter of 2016, subject to certain closing conditions. ETP and SXL will receive US$1.2 billion and US$800 million in cash at closing, respectively. As previously announced, the Bakken Pipeline entities have arranged a US$2.5 billion project financing facility that is expected to provide substantially all of the remaining capital necessary to complete the project.

As a result, ETP and SXL plan to use the proceeds from the sale of the equity interest in the project to MarEn to pay down debt and to help fund their current growth projects. In addition, following the closing of the transaction, all owners of the Bakken Pipeline will participate on a pro rata basis for any incremental capital needs to complete the project.

Upon closing, a subsidiary of MPC has committed to participate in a forthcoming Dakota Access/Energy Transfer Crude Oil Pipeline open season, and subject to the terms and conditions of the open season, make a long-term volume commitment on the Bakken Pipeline Project. A new open season is expected to be launched in the third quarter of 2016.

Bakken Holdings Company, LLC, a joint venture between ETP and SXL (Bakken Holdings), owns a 75% membership interest in each of Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (“ETCO”), the entities responsible for developing, owning and operating the Bakken Pipeline Project. The project will consist of approximately 1172 miles of new 30 in. dia. crude oil pipeline from North Dakota to Patoka, Illinois, and more than 700 miles of pipeline converted to crude service from Patoka to Nederland, Texas. Bakken Holdings is selling 49% of its 75% interest (36.75%) in Dakota Access and ETCO. The remaining 25% of each of Dakota Access and ETCO is owned by wholly-owned subsidiaries of Phillips 66.

Upon closing, ownership in the Bakken Pipeline Project will be as follows: ETP/SXL – 38.25%, MarEn 36.75% and PSX – 25%. ETP continues to oversee construction of the pipeline, which is expected to be ready for service at the end of this year. Once in operation, SXL will be the operator.

The Dakota Access pipeline is currently expected to deliver in excess of 470 000 bpd of crude oil from the Bakken/Three Forks production area in North Dakota to market centers in the Midwest. The Dakota Access pipeline will provide shippers with access to Midwestern refineries, potential unit-train rail loading facilities to facilitate deliveries to East Coast refineries, and the Gulf Coast market. The Energy Transfer Crude Oil pipeline, through an interconnection in Patoka, Illinois with Dakota Access, will provide crude oil transportation service from the Midwest to the Sunoco Logistics Partners and Phillips 66 storage terminals located in Nederland, Texas.

Porter Hedges LLP acted as legal counsel to ETP and SXL, and Credit Suisse Securities (USA) LLC acted as financial advisor.

Edited from source by Stephanie Roker

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