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Spectra to buy Express-Platte pipeline for $1.25 billion

BY BEN LEFEBVRE and SAABIRA CHAUDHURI

HOUSTON -- Spectra Energy will pay $1.25 billion in cash for the Express-Platte Pipeline System, an acquisition that will make it one of the major movers of crude oil from Canada to the U.S. Midwest.

The acquisition gives natural-gas-pipeline operator Spectra 100% control of one of the three pipelines bringing oil from West Canada and North Dakota to refineries around Illinois. The fight over TransCanada' s Keystone XL project, a proposed pipeline connecting Alberta to the U.S. Midwest that has met pushback from environmentalists, has put a chill on new cross-border pipelines despite growing Canadian oil production.

The 1,717-mile Express-Platte pipeline system deliver 280,000 bopd of crude oil to refineries run by Exxon Mobil, Phillips 66 and others. Refineries in the region consume a combined 3.5 MMbopd, according to the U.S. Energy Information Administration.

"Given today' s regulatory environment, the fact that these assets are in the ground already is a huge advantage," Spectra Chief Executive Greg Ebel said during a call with investors. The deal is "representing a unique opportunity for Sempra to participate in rapidly expanding crude oil markets."

Spectra said it will buy Kinder Morgan' s one-third stake in the system for about $380 million pretax. Kinder Morgan' s joint venture partners in Canada--the Ontario Teachers' Pension Plan Board and Borealis Infrastructure, the infrastructure investment arm of the OMERS pension plan--are also selling their interests in the pipeline system. Spectra will pay $1.25 billion in cash and take on $240 million of debt to fund the deal.

Kinder Morgan' s latest sale comes after the Houston-based pipeline company in August said it had agreed to sell some of its Rocky Mountain natural-gas processing and pipeline assets to Tallgrass Energy Partners for about $1.8 billion as part of a deal with federal antitrust regulators to allow its acquisition of El Paso to go forward.

12/11/2012

 

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