October 2019, Vol. 246, No. 10

Global News

Kinder Morgan Takes Final Bow Out of Canada

A year after selling its Trans Mountain Pipeline system and expansion project to Canada’s government for $4.5 billion, U.S. operator Kinder Morgan is making its final exit from the “Great White North” with the $3.3 billion sale of Kinder Morgan Canada and the Cochin Pipeline system to Calgary-based Pembina Pipeline. 

Kinder Morgan Canada's Vancouver Wharves (Photo: KML)
Kinder Morgan Canada's Vancouver Wharves (Photo: KML)

The deal includes a significant crude oil storage and terminaling business in Western Canada’s key energy complex in a period of exceptionally high regional demand. Assets include the Edmonton storage and terminal business and Vancouver Wharves, a bulk storage and export/import business. The complex also connects Pembina’s conventional and oil sands pipelines to all major export pipelines.

Crude oil storage has been in high demand in Canada, as production from Alberta’s oilfields has exceeded pipeline takeaway capacity and producers have limited transport options.

The transaction includes 100% of the 1,810-mile Cochin Pipeline system, including the Canadian portion owned by Kinder Morgan Canada and the U.S. portion, which accounts for nearly half of the deal at $1.54 billion.

The 95,000-bpd Cochin system, which currently imports condensate into the Alberta region to dilute its heavy oil production, crosses seven U.S. states and three Canadian provinces.  It connects Pembina’s operations in the Channahon, Bakken and Edmonton areas to markets in Mont Belvieu, Conway and Edmonton. Pembina said there is also potential to connect the eastern leg of the Cochin system to its assets and markets in Sarnia, Ontario.

The Edmonton crude oil complex includes 10 million barrels of storage capacity, inbound and outbound connectivity, which Pembina views as “highly attractive in the current environment.”  Pembina said it has identified a number of expansion possibilities at Vancouver Wharves, a 125 acre bulk marine terminal facility that currently transfers more than 4 million tons of bulk cargo annually. P&GJ

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