Enbridge, Marathon buy into Bakken Pipeline System

By Patrick C. Miller | August 03, 2016

Enbridge Energy Partners LP and Marathon Petroleum Corp. this week announced the formation of a new joint venture with Energy Transfer Partners LP and Sunoco Logistics Partners LP to acquire an equity interest in the Bakken Pipeline System.

The Dakota Access Pipeline—which will carry about 470,000 barrels of Bakken crude per day from western North Dakota to a terminal in Illinois—and the Energy Transfer Crude Oil Pipeline (ETCOP)—which transports the oil from Illinois to the Texas Gulf Coast—are collectively known as the Bakken Pipeline System.

Marathon and Enbridge acquired a 49 percent equity interest in the holding company that owns 75 percent of the Bakken Pipeline System from an affiliate of Energy Transfer and Sunoco Logistics.

Under this arrangement, Enbridge and Marathon will indirectly hold 75 percent and 25 percent respectively of the joint venture's 49 percent interest in the Bakken Pipeline holding company. The purchase price of Enbridge’s 27.6 percent interest in the pipeline system is $1.5 billion. The transaction is expected to close in the third quarter of 2016.

Construction on the 1,168-mile-long, $3.78 billion Dakota Access Pipeline began in May and is expected to be ready for service by the end of 2016. ETCOP—an existing natural gas pipeline—is being converted by the Energy Transfer Crude Oil Co. to transport oil and is also expected to be in service by the end of the year.

Also this week, Energy Transfer, Sunoco Logistics and Phillips 66 announced the successful completion of project-level financing for the Dakota Access Pipeline and ETCOP projects. The $2.5 billion facility is anticipated to provide most of the remaining capital needed to complete the projects.

The Standing Rock Sioux Tribe—represented by the environmental organization Earthjustice—filed a lawsuit against the U.S. Army Corps of Engineers after the agency last week issued the final permits for the Dakota Access pipeline. In the lawsuit filed in the District of Columbia U.S. District Court, Earthjustice contends that the corps violated the National Historic Preservation Act and other laws.

The pipeline crosses the Missouri River upstream from the Standing Rock reservation on the North Dakota-South Dakota border. The tribe said the pipeline threatens its drinking water supply. “An oil spill at this site would constitute an existential threat to the tribe’s culture and way of life,” Earthjustice said in a news release.

Lisa Dillinger, a spokesperson for Dakota Access, said the company is disappointed that the tribe and EarthJustice have taken legal action in an attempt to stop an important energy infrastructure project.

“We support the U.S. Army Corps of Engineers and plan to provide whatever support we can to defend and protect this project and our national interests as Americans,” she said.

Dillinger said the permit issued by the corps enables construction to move forward and will limit construction activities to one growing season.

The Courier in Waterloo reported that construction equipment being used to build the Dakota Access Pipeline in Iowa suffered an estimated $1 million in damages from fires early this week at three sites in Jasper and Mahaska counties. The Iowa Division of Criminal Investigation is investigating the fires as possible arson.

“It is unfortunate that people need to behave in this manner,” said Dillinger, confirming that four pieces of heavy equipment were burned.

“We have increased security along the route and are actively pursuing the situation with law enforcement,” she added. “If caught, we will prosecute to the maximum extent allowed by law, both criminally and civilly. We will not tolerate this kind of activity, which is a safety hazard to all concerned.”

Dillinger said that in North Dakota, South Dakota and Illinois, work on the Dakota Access Pipeline is in all stages of the construction process with restoration occurring in some areas.

“In areas of Iowa that are furthest along, we are stringing and welding pipe and lowering it in,” she said.

 

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