Spectra tackles oil transportation

Houston-based Spectra Energy is tossing out a challenge to Enbridge, TransCanada and Kinder Morgan in the transportation of crude oil from Western Canada, by acquiring the Express-Platte system for $1.49 billion.

The deal, consisting of $1.25 billion in cash and $240 million in debt, gives Spectra ownership of one of the three leading pipelines carrying Canadian crude to refineries in the U.S. Rocky Mountain and Midwest regions, while reducing Spectra’s reliance on natural gas.

The Express pipeline carries 280,000 barrels per day from the Hardisty terminal in central Alberta to refining markets in Montana and Wyoming, while the 164,000 bpd Platte line connects with Guernsey, Wyo., and the Wood River refining region in Illinois.

BMO Capital Markets analyst Carl Kirst welcomed the move because it offers a “new growth platform” at a time when the industry has few prospects of new infrastructure on the horizon and “provides a backbone to compete.”

Spectra Chief Executive Officer Greg Ebel told analysts that Spectra intends to chase investments in oil and refined products pipelines, storage tanks and terminals.

The Express-Platte system was owned equally by the Ontario teachers’ Pension Plan, Borealis Infrastructure and Kinder Morgan Energy Partners.

—Gary Park