An affiliate of Enbridge Energy Partners (EPP) has announced plans to withdraw regulatory applications associated with the Sandpiper project.
The applications are pending with the Minnesota Public Utilities Commission.
After completing a review of the project, EEP concluded that it should be put on hold until such a time as crude oil production in North Dakota recovers well in order to support the development of new pipeline capacity.
The company believes that new pipeline capacity will not be needed until beyond its five-year planning horizon.
Enbridge and a special committee have also individually signed an agreement on the terms of an arrangement, through which each of them would fund the acquisition of and participate in the returns generated by a 27.6% interest in the Bakken Pipeline System.
The investment in this pipeline is expected to be jointly funded 75% by Enbridge, through Enbridge Energy Company (EECI), and 25% by EEP.
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By GlobalDataAs part of the joint funding agreement, EEP will have an option to acquire an additional 15% interest in the investment until 31 December 2019.
The arrangement is subject to satisfaction of the closing conditions of the Bakken Pipeline acquisition by the system's owners.
At the closing of the agreement, Enbridge plans to fund its indirect investment in the pipeline from available liquidity.
Enbridge president and CEO Al Monaco said: "This acquisition of an interest in the Bakken Pipeline represents another important step in expanding our market access strategy.
"The system connects the prolific Bakken formation to eastern PADD II and the US Gulf Coast (USGC), providing customers with access to premium markets at a competitive cost.
“In light of the deferral of Sandpiper, our investment in the Bakken Pipeline will accelerate cash flow generation from our Bakken assets and help alleviate the funding drag associated with a large greenfield project, further enhancing our near-term financial outlook and strengthening the company's consolidated credit metrics."
The company's and EEP's interest in the Bakken Pipeline will be acquired through an indirect investment in a joint venture (JV) with Marathon Petroleum.
The JV will own a 49% interest in an affiliate of Energy Transfer Partners and Sunoco Logistics Partners, which in turn holds a 75% stake in the system.
