Marathon Affiliate Invests in Expanding Pipeline Capacity

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Marathon Petroleum Corp.’s pipeline division has made two major investments to expand its crude oil pipeline capacity.

MPLX LP, the midstream infrastructure company formed by Findlay, Ohio-based Marathon Petroleum in 2012, announced Feb. 15 that it has closed on a transaction to acquire a partial, indirect equity interest in the Dakota Access Pipeline (DAPL) and the Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system, through a joint venture with Enbridge Energy Partners LP. The joint venture company is called MarEn Bakken Co. LLC.

MPLX contributed $500 million of the $2 billion purchase price paid by the joint venture to acquire a 36.75 percent interest in the Bakken Pipeline system from Energy Transfer Partners LP and Sunoco Logistics Partners LP. Through a subsidiary, MPLX owns a 25 percent interest in the joint venture, which equates to an approximate 9.2 percent indirect equity interest in the Bakken Pipeline system. MPLX funded the contribution with cash on hand.

RELATED: Enbridge, Marathon to Pay $2B for Stake in Bakken Pipeline System

Announced two days prior, on Feb. 13, a subsidiary of MPLX agreed to purchase the Ozark Pipeline from Enbridge Piplines LLC for approximately $220 million. The deal between Enbridge and MPLX Pipe Line Holdings LLC is expected to close in the first quarter of 2017, subject to customary closing conditions, including regulatory approvals.

The Ozark pipeline is a 433-mile, 22-in. crude oil pipeline originating in Cushing, Oklahoma, and terminating in Wood River, Illinois, capable of transporting approximately 230,000 barrels per day (bpd).

RELATED: MPLX’s Cornerstone Pipeline Transporting Utica Shale Liquides

MPLX also announced that an open season recently conducted by Enbridge received sufficient long-term volume commitments to plan an expansion of the pipeline’s capacity to approximately 345,000 bpd. The expansion project design includes increasing the horsepower at pump stations along the pipeline and adding drag-reducing agents to the crude oil. The expansion project is expected to be complete in the second quarter of 2018.

“We believe MPLX is extremely well-positioned to grow through a combination of organic projects, dropdowns from our sponsor Marathon Petroleum Corp., and third-party acquisitions,” said Don Templin, president of MPLX. “Ozark Pipeline will expand the footprint of our logistics and storage segment by connecting Cushing-sourced volumes to our extensive Midwest pipeline network.”

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