Enbridge Inc. (TSX:ENB)(NYSE:ENB) has announced it has joined forces with Marathon Petroleum Corp (NYSE:MPC) to buy 37% of the Bakken pipeline project from Energy Transfer Partners and Sunoco Logistics Partners for $2 billion.
This acquisition opportunity was attractive to Enbridge for a number of reasons. The company gets to expand in the United States, a market that should have good energy production for decades to come. And there has been a real demand for projects that are already operational rather than putting time, effort, and money into new projects that may get nixed for a number of different reasons.
Canada’s pipelines haven’t been having good luck getting new projects approved. TransCanada’s Keystone XL expansion was vetoed by President Obama after years of opposition from environmentalists. And Enbridge’s Northern Gateway project through Northern British Columbia keeps running into more issues, including being at least temporarily shelved by a B.C. court.
Even after investing billions in this project, Enbridge is still capable of building Northern Gateway, of course. But it could also mean a shift in strategy for Canada’s largest pipeline operator. It’s much easier to acquire assets that are already operational than it is to go through the arduous task of getting approvals for new projects.
Enbridge shares fell slightly on the news, heading $0.29 lower in trading on Wednesday, a loss of 0.56%. Shares remain in the middle of their 52-week range of between $40.03 and $58.67 each, currently trading at $52.65.
