Partners reach agreement on Bakken pipeline

Close up of two parallel pipelines
Close up of two parallel pipelines

Despite earlier information to the contrary the disputed Bakken pipeline, that is meant to transport crude from North Dakota to Oklahoma, has moved closer to commencing construction.

On the 24th December 2014 Energy Transfer Partners and Energy Transfer Equity announced that the conflicts committees and the Boards of Directors of ETP and ETE have approved the final terms of the previously announced transaction involving the Bakken Pipeline project and Sunoco Logistics Partner general partner interest (GP) and incentive distribution rights (IDR) exchange.

In the transaction, ETP will receive for redemption the 30.8 million ETP common units currently owned by ETE, ETE’s 45 per cent interest in the Bakken Pipeline, and US$879 million in cash. It will also receive reimbursement for development expenses related to the Bakken Pipeline, in exchange for an additional 40 per cent interest in the SXL GP/IDRs. This will be represented by additional Class H units to be issued by ETP.

In addition, ETP and ETE have agreed to reduce existing IDR subsidies from ETE to ETP by US$55 million in 2015 and US$30 million in 2016.

The transaction is expected to close in February 2015 after the record date for fourth quarter distributions on both the SXL GP interest and IDRs and ETP common units, but will be effective as of 1 January 2015.

North Dakota’s Bakken region and Oklahoma’s Cushing are two of the most prolific oil hubs in the U.S. energy revolution. Pipeline construction projects have taken on increasing prominence as the crude boom picks up speed, sending domestic oil production skyrocketing to more than 9 million barrels per day.

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