Enbridge Inc., Calgary, has agreed to acquire Tallgrass Energy LP's crude oil business for US$2.55 billion in cash, adding crude transportation, storage, and marketing assets that connect the Bakken, Powder River, and Denver-Julesburg basins with Cushing, Okla.

The transaction includes:

• A 75% interest in Pony Express Pipeline, a 1,050-mile crude oil system with capacity of about 460,000 b/d connecting Rockies production to Cushing and providing access to about 500,000 b/d of refining capacity.
• A 51% interest in the Powder River Gateway system, including two crude oil pipelines with combined capacity of about 240,000 b/d.
• About 8.4 million bbl of storage capacity across nine crude oil terminals connected to Pony Express, including a 60.3% non-operating interest in the Deeprock Crude Terminal in Cushing.
• Stanchion Energy, a crude oil marketing business.

Rockies-to-Cushing crude corridor

In announcing the deal Sept. 9, Enbridge said the assets provide a strategic connection among the Bakken, Powder River, and Denver-Julesburg basins through Cushing and complement the company's existing Express-Platte system.

"This acquisition strengthens Enbridge's position as North America's leading crude oil transporter and expands its footprint into the US Rockies region," said Colin Gruending, executive vice-president and president, Enbridge Liquids Pipelines.

"The Pony Express system is a premier crude oil corridor connecting some of North America's most productive basins with key refining and market centers. These assets complement our broader North American footprint."

Enbridge said Pony Express is highly contracted through the decade with predominantly investment-grade counterparties. Available takeaway capacity from the Denver-Julesburg and Powder River basins remains closely aligned with expected production growth, supporting utilization and contract renewal prospects.

The acquisition also includes the Pony Express expansion project (PXP2), a planned $300-million project that would increase system capacity to about 515,000 b/d. The expansion is supported by take-or-pay contracts and is expected to enter service in late 2027.

The transaction is expected to close later this year, subject to regulatory approval and customary closing conditions.

Follows Salt Creek acquisition

The Tallgrass acquisition follows Enbridge's August agreement to acquire Salt Creek Midstream's crude gathering business for $600 million. That transaction adds about 500 miles of crude gathering infrastructure in the Delaware basin and extends the company's Permian basin-to-export value chain through connections to its existing transportation and export assets.

To help fund the Tallgrass and Salt Creek acquisitions, Enbridge detailed in a separate release that it has launched a C$2.6-billion bought-deal common share offering. Proceeds also will provide flexibility for future growth opportunities, the company said.