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BridgeTex Gains Canada’s OMERS as Partner in $1.44B Deal with Plains, Magellan

BridgeTexas Pipeline Co. LLC, which is able to transport up to 400,000 b/d of crude oil from the Permian Basin to the Texas coast, on Tuesday gained a Canadian pension plan as a partner, after 50-50 owners Plains All American Pipeline LLC and Magellan Midstream Partners LP agreed to sell a half-stake for nearly $1.44 billion.

OMERS, the benefit pension plan for municipal employees in Ontario, along with OMERS Infrastructure Management Inc., would acquire 30% of the system from Plains and 20% from Magellan. Magellan would continue to operate the pipeline.

“We’re excited to enter into this joint venture with Plains All American and Magellan, consistent with our strategy to build long-term investment partnerships with leading corporations,” said OMERS Infrastructure’s Michael Ryder, senior managing director, Americas. “The addition of BridgeTex marks our re-entry into the U.S. midstream sector and is a welcome addition to our high-quality infrastructure portfolio.”

The BridgeTex system, which is being expanded by early 2019 to 440,000 b/d, extends from Colorado City in West Texas to Houston, with connectivity southeast to the Texas City area on the Gulf Coast. At Colorado City, crude is sourced from Plains’ Basin and Sunrise pipeline systems, and it delivers volumes into Magellan’s East Houston terminal and Houston crude oil distribution system.

Magellan’s system connects to refineries in the Houston and Texas City area, as well as to marine export capabilities via its Seabrook Logistics joint venture terminal.

Plains COO Willie Chiang and Magellan CEO Michael Mears said the investment “adds another long-term oriented owner to our joint venture. Furthermore, this transaction provides both Plains and Magellan proceeds to fund additional growth projects while allowing us to maintain a meaningful position in BridgeTex, which is strongly aligned with investments owned by both Plains and Magellan along the crude oil value chain.”

In addition to BridgeTexas, Plains has other West Texas-to-Gulf Coast crude oil projects on the drawing table. Among other things, the Cactus II Pipeline is to carry crude supply to the Corpus Christi area in South Texas. Enough interest was shown in its first open season that Plains held another earlier this year to add 585,000 b/d of takeaway capacity.

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