Page 8 - NorthAmOil Week 26
P. 8
NorthAmOil PIPELINES & TRANSPORT NorthAmOil
Kinder Morgan, Tallgrass soliciting interest in Bakken pipeline expansion
US
KINDER Morgan and Tallgrass Energy launched a binding open season on June 28 to solicit ship- per interest in an expansion of oil pipeline capac- ity out of the Bakken play in North Dakota. e joint tari open season was launched through their subsidiaries – Kinder Morgan’s Hiland Crude and Tallgrass Pony Express Pipeline. It started on June 28 and will last until July 28.
No further details, such as the size of the potential expansion, or what method the oper- ators would use to expand their systems, have yet emerged. A Kinder Morgan spokeswoman, Katherine Hill, told the Bismarck Tribune that her company would evaluate any expansion of its Hiland system “based on the level of interest and volume commitments obtained”.
e two companies are seeking commitments for oil transport service from points originating in the Bakken on the Hiland Crude system to re nery delivery points along the Pony Express and to the storage hub in Cushing, Oklahoma.
e Hiland Crude system currently has the capacity to move 88,000 barrels per day (bpd)
from the Bakken to Guernsey, Wyoming. From there, the crude is shipped on via the Pony Express system, which has a capacity of roughly 375,000 bpd from Guernsey to Cushing, and connects to three re neries along the way.
A spokeswoman for the North Dakota Public Service Commission (PUC) told the Bismarck Tribune that the agency had not yet received any applications to expand the Hiland system. Whether additional state permits will be needed depends on whether Kinder Morgan plans to build outside the pipeline’s existing corridor.
e open season comes a er several other pipeline operators have also talked up plans to increase pipeline capacity out of the Bakken. Ear- lier in June, Energy Transfer Partners said it was intending to nearly double capacity on its Dakota Access pipeline, from 570,000 bpd currently to up to 1.1 million bpd. (See NorthAmOil Week 25) And Phillips 66 and Bridger Pipeline have formed a joint venture to build the Liberty Pipe- line, which will transport crude from the Bakken and Rockies regions to Cushing.
INVESTMENT
UGI to buy Columbia Midstream for $1.28bn
APPALACHIAN BASIN
ENERGY distributor and marketer UGI announced on July 2 that its UGI Energy Ser- vices unit had struck a deal to buy Columbia Midstream Group’s equity interests from a sub- sidiary of TC Energy for around $1.28bn.
The move comes after reports emerged in April that TC Energy – formerly TransCanada – was exploring a potential sale of its Columbia unit. TC Energy is o oading some of its infra- structure assets in a bid to help nance the $8bn it has earmarked to spend on new projects in 2019, including the Coastal GasLink system and the Keystone XL pipeline. e company expects these projects to generate higher returns than its legacy assets.
UGI said the Columbia acquisition would “signi cantly” expand its midstream portfolio, as well as giving it the opportunity to invest a further $300-500mn over the next ve years at “attractive” returns.
Columbia’s operations are focused on the Appalachian Basin. The company owns five gathering systems, with a capacity of roughly 74mn cubic metres per day of gas, compris- ing about 240 miles (386km) of pipeline in the
southwestern core of the basin. TC Energy noted in a separate statement that the sale does not include any interest in the company’s minerals business in the Appalachian Basin, Columbia Energy Ventures.
UGI expects the transaction to be neutral to earnings per share (EPS) in the 2020 scal year, and accretive from the following year, not including the costs of the transaction and the integration of the business.
“We are very pleased to announce this important transaction as we continue to build a midstream business of scale,” said UGI’s pres- ident and CEO, John Walsh, in a statement. “This transaction expands our midstream capabilities in the prolific gas-producing region of the south-west Appalachian Basin and provides an initial investment into both wet gas gathering and processing. e [Colum- bia] assets t nicely into our strategy and fur- ther support our long-term commitments to shareholders of 6-10% adjusted EPS growth and 4% dividend growth.”
The transaction is anticipated to close in UGI’s scal fourth quarter.
P8
w w w . N E W S B A S E . c o m Week 26 04•July•2019
