Spectra Energy has reached an agreement to purchase a one-third interest in the Sand Hills and Southern Hills pipelines that are currently under construction in the US.
Both the pipelines are being built by DCP Midstream, which is a 50/50 joint venture between Spectra Energy and Phillips 66.
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Upon completion of the transaction, Spectra Energy, Phillips 66 and DCP Midstream each will own a one-third interest in the two pipelines.
The three companies will also equally fund the remaining capital expenditures through completion of the pipelines.
Spectra Energy is expected to invest somewhere between $700m-800m in the two pipeline projects.
Spectra Energy president and chief executive officer, Greg Ebel, said Sand Hills and Southern Hills pipeline projects will add to the company’s existing network of natural gas pipelines across North America.
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By GlobalData"Investing in these NGL pipelines, with our DCP Midstream joint venture partner Phillips 66, allows DCP Midstream to continue advancing its attractive growth plans," said Ebel.
"As these NGL pipelines begin serving customers later this year and in 2013, they will directly add attractive, stable earnings and cash flow to Spectra Energy’s results.
The Sand Hills pipeline is designed to provide NGL transportation from the Permian Basin and Eagle Ford region and will have an initial capacity of 200,000 barrels per day that will be expandable to 350,000 barrels per day.
The Southern Hills pipeline, which is to be in service by 2013, will provide 150,000 barrels per day, expandable to 175,000 barrels per day, of NGL transportation from the mid-continent to Mont Belvieu.
The deal is expected to close by the end of November 2012.
Image: Spectra Energy has reached an agreement to purchase a one-third interest in the Sand Hills and Southern Hills pipelines. Photo: Kevin Saff.
