OMERS to take 50% stake in BridgeTex crude oil pipeline in Texas for $1.4bn

OMERS Investments, the infrastructure investment and management arm of Canadian pension fund OMERS, has signed a deal to acquire 50% stake in BridgeTex crude oil pipeline from Plains All American Pipeline and Magellan Midstream Partners for $1.438 billion.

The BridgeTex crude oil pipeline system in Texas transports 400,000 barrel-per-day (bpd) of crude oil sourced from Midland and Colorado City in the Permian Basin to the Houston Gulf Coast area and also for marine export through the Houston Ship Channel.

After the completion of the deal, while OMERS will become the largest shareholder of the Texan crude oil pipeline, Plains All American Pipeline and Magellan Midstream Partners will retain stakes of 20% and 30%, respectively.

As of now, Plains All American Pipeline and Magellan Midstream Partners hold stakes of 50% each in the BridgeTex crude oil pipeline system. Plains All American Pipeline acquired its stake in the crude oil pipeline from Occidental Petroleum for $1.07 billion in 2014.

OMERS to acquire a stake of 50% in BridgeTex crude oil pipeline in Texas for $1.4bn. Photo courtesy of outgunned21 at Freeimages.com.

Willie Chiang – Plains All American Pipeline Chief Operating Officer and Michael Mears – Magellan Midstream Partners CEO said: “OMERS investment adds another long-term oriented owner to our joint venture. Furthermore, this transaction provides both Plains and Magellan proceeds to fund additional growth projects while allowing us to maintain a meaningful position in BridgeTex, which is strongly aligned with investments owned by both Plains and Magellan along the crude oil value chain.”

OMERS is expected to close its acquisition of the 50% stake in the BridgeTex crude oil pipeline system in the fourth quarter of this year should the deal satisfy the standard closing conditions.

Michael Ryder – Senior Managing Director of OMERS Infrastructure Americas, said: “We’re excited to enter into this joint venture with Plains All American and Magellan, consistent with our strategy to build long-term investment partnerships with leading corporations.

“The addition of BridgeTex marks our re-entry into the U.S. midstream sector and is a welcome addition to our high-quality infrastructure portfolio.”

The BridgeTex crude oil pipeline is set to be expanded to have a new capacity of 440,000bpd with the additional 40,000bpd of capacity scheduled to be placed into operations in early 2019.