Inter Pipeline is acquiring the pipeline system in exchange for stakes in the Empress II and the Empress V straddle plants
Inter Pipeline has agreed with Plains Midstream Canada, a wholly owned subsidiary of Plains All American Pipeline, to acquire the Milk River pipeline system.
The company is acquiring the pipeline system in exchange for its 100% stake in the Empress II and 50% stake interest in the Empress V straddle plants. Plains is expected to pay $35m in cash to Inter Pipeline, as part of the transaction.
The transaction also includes pumping and metering facilities, two crude oil storage tanks and truck unloading facilities.
Inter Pipeline is a major petroleum transportation, natural gas liquids processing, and bulk liquid storage business based in Calgary, Alberta, Canada. The company owns and operates energy infrastructure assets in western Canada and Europe.
The company’s straddle plants Empress II and Empress V are currently being operated by Plains, and are located near Empress, Alberta on the eastern leg of the TC Energy Alberta System.
Also, its straddle plants are geographically located remote compared to its core natural gas liquids processing assets.
Inter Pipeline president and chief executive officer Christian Bayle said: “This transaction is expected to be accretive to funds from operations and provide meaningful operational and commercial synergies with our existing conventional oil transportation business.
“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.”
The Milk River pipeline system contains two 16km pipelines
The Milk River pipeline system contains two 16km pipelines with around 90,000 barrels per day current throughput volume. The pipeline system links Inter Pipeline’s Bow River pipeline system from Milk River, Alberta to the US and Canadian border west of Coutts, Alberta.
The company said that nearly 90% of the volume flowing through the Milk River pipeline originates from the Bow River system.
The transaction is expected to be completed in early 2021, subject to satisfaction of certain customary conditions.