Enbridge proposes to transfer $900m asset to Enbridge Energy Partners

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Enbridge proposes to transfer $900m asset to Enbridge Energy Partners

Enbridge Inc. has proposed to transfer its 66.7% interest in the U.S. segment of the Alberta Clipper Pipeline to its affiliate, Enbridge Energy Partners L.P. (EPP) for approximately US$900 million.

EEP is the owner of the other 33.3% interest. The proposed consideration includes cash of approximately US$300 million, plus approximately US$600 million of Class E equity units to be issued to Enbridge by EEP.

The U.S. segment of the Alberta Clipper Pipeline is a 36-inch diameter, 325 mile long crude oil pipeline from the U.S. border near Neche, North Dakota to Superior, Wisconsin. The initial capacity of the line is 450,000 barrels per day (bpd).

The line is being expanded in two phases to a capacity of 800,000 bpd through the addition of increased pumping horsepower. The required expansion investments are subject to separate joint funding arrangements between Enbridge and EEP.

The U.S. segment of Alberta Clipper earns a stable cost of service return which is not subject to variations in throughput or operating costs. The transfer will not require any issuance of equity to the public by EEP, and is expected to be immediately accretive to distributable cash flow per unit by approximately 3%.

Mr. J. Richard Bird, Enbridge's Executive Vice President, Chief Financial Officer and Corporate Development commented:

This is the latest in a series of actions which Enbridge has taken to enhance EEP's distributable cash flow and restore its effectiveness as one of the sources of low cost funding for Enbridge's organic growth opportunities and, through drop downs such as this one, for Enbridge's broader growth capital program.

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