Energy Transfer Expands Pipeline Network

Energy Transfer LP reported Thursday that it has added crude oil and natural gas liquids gathering and transmission pipelines in the DJ Basin in Colorado and Anadarko Basin in Oklahoma and Kansas as well as natural gas gathering and processing assets in Western Canada’s Alberta Basin.

The larger pipeline network, along with a major crude oil terminal near Houston, come with the completion Thursday of Energy Transfer’s approximately $5 billion cash and stock acquisition of SemGroup Corp. During a special meeting Wednesday, holders of a majority of Tulsa-based SemGroup’s stock voted to approve the deal, Dallas-based Energy Transfer said in a written statement.

Effective with the opening of the market Thursday, SemGroup ceased to be a publicly traded company and its common stock discontinued trading on the New York Stock Exchange, Energy Transfer added. It contends that combining both firms’ operations will save more than $170 million annually, yielding “commercial and operational synergies of $80 million, financial savings of $50 million and cost savings of $40 million.”

As Rigzone reported in September – when the companies revealed their agreement to merge – the assets from SemGroup complement Energy Transfer’s infrastructure in the Permian Basin and on the Gulf Coast. Moreover, the combination adds the Houston Fuel Oil Terminal (HFOTCO) on the Houston Ship Channel to Energy Transfer’s holdings.

Energy Transfer is adding to its pipeline assets further by building the Ted Collins crude oil pipeline, a 75-mile (121-kilometer) conduit linking HFOTCO to the acquiring firm’s existing terminal in Nederland, Texas. The company stated Thursday that the pipeline – with an initial capacity of 500,000 barrels per day – should begin service in 2021.

The close of the SemGroup acquisition marks Energy Transfer’s second major announcement this week. On Tuesday it reported progress on its Lake Charles LNG project with Shell.

To contact the author, email mveazey@rigzone.com.