Pembina pays $650M for N.D. pipeline

CALGARY—Pembina Pipeline Corp. is acquiring a 700-kilometre pipeline system originating in North Dakota that will give it access to the U.S. state’s North Bakken formation for natural gas liquids.

The US$650-million transaction with private equity firm Riverstone Holdings LLC also includes an interest in a Saskatchewan extraction plant for ethane, a liquid byproduct of natural gas production.

Pembina says the Vantage pipeline system links a growing supply of ethane from North Dakota to the petrochemical market in Alberta.

The fee-for-service pipeline, terminating near Empress, Alta., is expected to have an ultimate capacity of about 60,000 barrels per day, up from its current 40,000, Pembina said.

“We have watched the development of these assets with great interest as they represent an excellent opportunity to expand our footprint into one of the most promising hydrocarbon plays in North America and, as such, the transaction is a low-risk, logical step-out for Pembina,” president and CEO Mick Dilger said in a news release Monday.

Pembina said the transaction is expected to add cash flow per share in 2016.

The deal also includes Mistral Midstream Inc.’s interest in the Saskatchewan ethane extraction plant, which will connect to the Vantage pipeline system.

The deal is subject to regulatory approvals, including from the National Energy Board and the Canada Transportation Act. It is expected to close in the fourth quarter of 2014.

Pembina owns and operates pipelines that transport various hydrocarbon liquids including conventional and synthetic crude oil, heavy oil and oil sands products, condensate (diluent) and natural gas liquids produced