Enbridge and Marathon Agree $2 Billon Fee For Stake In Bakken Pipeline

Canadian energy delivery company, Enbridge Inc, in partnership with American petroleum refining, marketing and transportation company, Marathon Petroleum Corporation, have agreed to a joint venture to purchase a 49% stake in the Bakken Pipeline.

The offer has reportedly been accepted by affiliates of Sunoco Logistics Partners as well as Energy Transfer Partners (ETP), the companies that put up their stake in the pipeline for sale.  Enbridge Energy Partners (the actual Enbridge Inc subsidiary engaged in the trade) is paying three quarters of the fee at $1.5 billon whilst Marathon is set to pay the remaining $500 million.

Enbridge being the larger contributor in the purchase will receive an equally large portion of interest in the pipeline, obtaining 27.6% out of the 36.75% up for grabs. Sunoco and ETP are set to receive $1.2 billion and $800 million respectively for the sale.

Enbridge senior officials are apparently rather pleased with their latest buy suggesting it to be quite favourable. The deal will grant Enbridge the means to transport shale oil through the Bakken Pipeline to refineries along the United States Gulf Coast.

A statement by Enbridge Executive Vice President, Guy Jarvis, reads:

“This [acquisition] will provide our shippers the ultimate potential to reach the eastern USGC, which has been a strategic priority for us,”

In a news release, Enbridge Energy Partners’ President, Mark Maki, disclosed a statement regarding the purchase saying:

“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,”

The joint-venture will effectively earn Enbridge and Marathon one third ownership of the pipeline system. The deal’s conclusion will mean Sunoco and Energy Transfer Partners own 38.5% of the pipeline system, Phillips 66 affiliates own 25% and Enbridge with Marathon will own 36.75%.