UPDATE 2-Spectra moves into oil transportation with $1.49 bln pipeline buy
By Swetha Gopinath
Dec 11 (Reuters) - Spectra Energy Corp said it will spend $1.49 billion to buy the Express-Platte System, one of the three major pipelines that move crude oil from Western Canada to refineries in the Rocky Mountain and Midwest regions in the United States.
The purchase, which comprises $1.25 billion in cash and $240 million in debt, will give Spectra a foothold in the rapidly expanding North American crude oil pipeline market and lower its dependence on natural gas.
"Given today's regulatory environment, the fact that these assets are in the ground already is a huge advantage as we enter the sector," Chief Executive Gregory Ebel said on a conference call with analysts.
Canada has only three major pipelines that take conventional and oil sands crude into the Midwest, and fears are mounting that the export of Canadian crude will be constrained due to pipeline project delays, even as production burgeons.
TransCanada Corp's Keystone XL pipeline, designed to transport Canadian crude oil from Alberta to Port Arthur in Texas, has been mired in regulatory issues.
"We like this move as it offers Spectra a new growth platform. Given the present difficulties in sighting any new energy infrastructure, this provides a backbone to compete," BMO Capital Markets analyst Carl Kirst wrote in a note to clients.
Spectra will pursue investments in oil and refined products pipelines, storage tanks and terminals, CEO Ebel said. Continued...