Canadian pipeline giant Enbridge is expanding into the U.S. Rocky Mountains with a US$2.55 billion acquisition of crude oil pipelines, storage facilities and terminals from Tallgrass Energy.The deal announced Wednesday will give Calgary-based Enbridge interests in the Pony Express Pipeline and Powder River Gateway system, connecting oil producers in the Powder River and Denver-Julesburg basins with the major crude oil hub at Cushing, Okla.“This acquisition strengthens Enbridge’s position as North America’s leading crude oil transporter and expands its footprint into the U.S. Rockies region,” said Colin Gruending, Enbridge executive vice-president and president of Liquids Pipelines.Enbridge will acquire a 75% interest in the 1,050-mile Pony Express Pipeline, which runs from Guernsey, Wyo., and several locations in Colorado to Cushing.The pipeline has an average annual capacity of approximately 460,000 barrels per day and provides direct access to roughly 500,000 barrels per day of refining capacity.Enbridge will also acquire a 51% interest in the Powder River Gateway system, which includes the 80-mile Iron Horse Pipeline and 70-mile Powder River Express Pipeline.The two pipelines have a combined capacity of approximately 240,000 barrels per day and connect the Powder River Basin to Pony Express.“The Pony Express system is a premier crude oil corridor connecting some of North America's most productive basins with key refining and market centers,” said Gruending.The acquisition also includes approximately 8.4 million barrels of storage capacity at nine terminals connected to Pony Express.That includes a 60.3% non-operating interest in the Deeprock Crude Terminal in Cushing..Enbridge will acquire Stanchion Energy, a crude oil marketing business used to increase throughput and optimize the value of the pipeline and storage assets.The company said Pony Express is heavily contracted through the remainder of the decade, predominantly with investment-grade counterparties.Enbridge will also assume the US$300 million PXP2 expansion project, which is expected to increase Pony Express capacity from approximately 460,000 to 515,000 barrels per day.The expansion is scheduled to enter service in late 2027.The newly acquired network will complement Enbridge's existing Express-Platte system, which carries crude oil from Hardisty, Alta., through Montana, Wyoming, Nebraska, Kansas and Missouri to Wood River, Ill.Enbridge said the acquisition is expected to generate significant free cash flow while providing growth and operational opportunities across its North American liquids pipeline network.The company estimates the transaction represents a purchase multiple of 10 to 11 times forward enterprise value to EBITDA.The deal is expected to close later this year.“These assets complement our broader North American footprint,” said Gruending.“As operator of Pony Express, we look forward to leveraging Enbridge's proven operational capabilities to safely and reliably serve customers across the system.”
