Plains All American Pipeline and Magellan Midstream Partners have reached an agreement to divest a 50% stake in BridgeTex Pipeline Company to Canadian pension fund OMERS for $1.44bn.
Established in 1962, OMERS is the defined benefit pension plan for municipal employees in Ontario.
Pursuant to the agreement, OMERS will buy a 30% interest from Plains and a 20% interest from Magellan.
Once the transaction is completed, Plains will hold a 20% interest, while Magellan will continue to operate the BridgeTex crude oil pipeline system with a 30% interest.
With a capacity of 400,000 barrels a day, the pipeline extends from Colorado City in West Texas to refineries in Houston and Texas City.
The pipeline sources crude oil from Plains’ Basin and Sunrise pipeline systems in Colorado City and delivers volumes into Magellan’s East Houston terminal and Magellan’s Houston crude oil distribution system.
Shippers will also have access to marine export capabilities via Magellan’s Seabrook Logistics joint venture terminal.
OMERS Infrastructure Americas senior managing director Michael Ryder 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 US midstream sector and is a welcome addition to our high-quality infrastructure portfolio.”
By next year, the capacity of the BridgeTex pipeline is set to be expanded to 440,000 barrels a day.
Plains All American Pipeline chief operating officer Willie Chiang and Magellan Midstream Partners CEO Michael Mears 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.”
The completion of the transaction is conditional on the fulfilment of customary closing conditions and is set to take place in the fourth quarter of this year.
