Inter Pipeline to acquire Milk River pipeline system from Plains Midstream

Inter Pipeline has signed an asset exchange deal to acquire the Milk River pipeline system in Alberta, Canada from Plains Midstream Canada, a subsidiary of US-based Plains All American Pipeline.

In exchange of this, the Canadian pipeline transport company will transfer its 100% stake in the Empress II straddle plant and 50% stake in the Empress V straddle plant. Both the gas plants are situated on the eastern leg of the NOVA Gas Transmission System (NGTL System).

According to Inter Pipeline, the Empress II and Empress V straddle plants are geographically remote compared to its main natural gas liquids processing assets.

As per the terms of the deal, Plains Midstream Canada will also pay CAD 35 million to Inter Pipeline.

The Milk River pipeline system links the Inter Pipeline-operated Bow River pipeline system from Milk River in Alberta to the US/Canadian border west of Coutts in Alberta. It is made up of two 16km long pipelines that have a current throughput volume of about 90,000 barrels per day.

Almost 90% of the volume that currently flows via the Milk River pipeline originates from the Bow River system.

Christian Bayle – President and CEO of Inter Pipeline 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 deal also includes pumping and metering facilities, a couple of crude oil storage tanks, and truck unloading facilities.

Through the acquisition, Inter Pipeline is expected to get incremental cash flow from tariff revenue and also marketing activities. The Milk River pipeline system is expected to generate nearly $25 million of annual EBITDA.

The transaction is expected to close early next year upon the meeting of customary conditions.