Calgary-based Enbridge is selling a pipeline system in Saskatchewan and Manitoba in order to free up cash for its acquisition of Spectra Energy.
In a deal announced on September 29, Calgary-based energy infrastructure company Tundra Energy Marketing Ltd (TEML) will buy Enbridge’s southeast Saskatchewan pipeline system for C$1.075 billion (US$813 million). The network includes over 1,600 km of oil and liquids gathering pipelines, around 547 km of trunk line, and four truck terminals in Saskatchewan and southwest Manitoba.
In a statement, Enbridge’s chief financial officer, John Whelen, said the sale was part of a larger US$2 billion sell-off of non-core assets aimed at freeing up financing for the Spectra merger. Enbridge announced it was taking over the Houston-based firm in September, with the move set to create North America’s largest energy infrastructure company. The C$37 billion (US$28 billion) deal is anticipated to close early next year.
Privately owned TEML said the Saskatchewan pipeline system carries around 175,000 barrels per day of oil to Enbridge’s Mainline system in Cromer, Manitoba. The main terminal of TEML’s Manitoba crude gathering system for the province and an interconnection with Enbridge’s Bakken Expansion pipeline that connects North Dakota production to the Mainline system are also located in Cromer. Enbridge noted that TEML’s acquisition did not include the Bakken Expansion pipeline.
Once the Saskatchewan pipeline deal is completed – which expected to happen late this year pending regulatory approval – TEML will handle over 250,000 bpd of crude production from Saskatchewan, Manitoba and North Dakota.
“TEML and its affiliated companies have operated for over 35 years in the Williston Basin,” TEML’s president, Bryan Lankester, said in a statement. “The acquisition of this well-cared-for asset is very complementary to TEML’s existing portfolio of midstream infrastructure.”
Employees working on the Saskatchewan system will join TEML once the acquisition has been completed.