Marathon Petroleum and Enbridge to acquire interest in Bakken Pipeline system for $2bn

Marathon Petroleum (MPC) and Enbridge Energy Partners have agreed to form a joint venture (JV) to acquire a partial equity interest in the Bakken Pipeline system in the US from Energy Transfer Partners and Sunoco Logistics Partners for $2bn.

MPC will own a 25% equity interest in the new JV with Enbridge and would hold about 9.2% interest in the pipeline system in exchange for its $500m investment, upon closing.

The company also expects its subsidiary to become a committed shipper on the Bakken Pipeline system.

MPC chairman, president and CEO Gary Heminger said: "This system is planned to provide cost-effective access to Bakken crude oil production for the Midwest and Gulf Coast, which will increase MPC's refinery supply flexibility.

"In addition, MPC's equity-ownership interest in these major pipelines will make a significant contribution toward the company's plan to grow its midstream logistics business."

The pipeline system is expected to be ready for service by the end of this year and will have the capacity to deliver more than 470,000 barrels per day of crude oil.

Oil will be transferred from the Bakken / Three Forks production area in North Dakota to the Midwest through Patoka, Illinois, and to the Gulf Coast.

MPC also announced that the company’s affiliate and Enbridge will cancel MPC's transportation services agreement related to the Sandpiper project and liquidate its ownership interest in North Dakota Pipeline Company.

Heminger said that MPC's investment in the Bakken Pipeline system will reduce the company's total expected capital investment in North Dakota crude oil-related pipelines.

As of 30 June this year, the company has contributed $301m to fund the construction costs for the Sandpiper pipeline project.

MPC's and Enbridge's JV investment in the pipeline system is expected to close in the third quarter of this year.

The Bakken system consists of the Dakota Access pipeline and the Energy Transfer Crude Oil pipeline projects.