October 05, 2020 [S&P Global Platts] – Inter Pipeline will acquire the Milk River crude oil pipeline system in Canada and about $26 million in cash from Plains All American Pipeline in exchange for two natural gas liquids straddle plants near Empress.
The 90,000 b/d, Milk River system consists of more than 40 miles of pipelines connecting Milk River, Alberta to the US-Canada border at Montana. The pipeline system already connects to Inter Pipeline’s Bow River Pipeline that stretches to the north of Hardisty.
The deal also gives Inter Pipeline pumping and metering facilities, two crude oil storage tanks and truck unloading facilities.
“The Milk River pipeline system has a natural alignment with our Bow River system, and this acquisition will improve our access to the Montana refining region, an important delivery market for Inter Pipeline and our customers,” said Inter Pipeline CEO Christian Bayle in a statement late Sept. 28.
In exchange, Plains will pick up full ownership of the Empress II NGL straddle plant and a 50% stake in the Empress V plant. Plains already operates the Empress plants, so Plains is just acquiring greater ownership of the facilities.
Inter Pipeline said it considered the straddle processing plants to be geographically remote from its other NGL processing facilities.
The straddle plants are located on the eastern leg of TC Energy’s Alberta pipeline system.
The deal is expected to close in early 2021.
In an analyst note, Tudor, Pickering, Holt & Co. said the transaction continues Inter Pipeline’s strategy of further investing in conventional crude oil pipeline systems. The asset swap is a bet by Inter Pipeline on crude oil prices and demand recovering later in 2021.
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