Enbridge Bets $2.6B on Tallgrass to Expand Rockies-to-Cushing Crude Network

Enbridge will acquire Tallgrass Energy’s crude oil transportation business for $2.6 billion, gaining a 75% operating interest in the 460,000-barrel-per-day Pony Express Pipeline, storage assets, and related Rockies-to-Cushing infrastructure. The deal complements Enbridge’s planned $600 million Salt Creek Midstream acquisition, which adds 420,000 barrels per day of Permian Basin gathering capacity and strengthens its wellhead-to-export value chain. Enbridge plans to fund the combined CAD 4.5 billion acquisitions with an equal mix of debt and equity, aiming to preserve its investment-grade balance sheet, maintain leverage targets, and continue funding its organic growth backlog.

Enbridge NYSE: ENB said it will acquire Tallgrass Energy’s crude oil transportation business for $2.6 billion, expanding its crude oil pipeline and storage footprint in the Rockies and strengthening connections to major North American producing basins and markets. The company also discussed its previously announced $600 million acquisition of Salt Creek Midstream’s crude oil gathering assets in the Permian Basin. Enbridge President and CEO Greg Ebel said the two transactions are intended to supplement the company’s organic growth portfolio and add long-term growth options to its liquids business.

The Tallgrass transaction includes a 75% operating interest in the Pony Express Pipeline, a 460,000-barrel-per-day long-haul crude pipeline connecting Guernsey, Wyoming, with Cushing, Oklahoma. The system transports crude from the Bakken and Rockies producing regions to regional refineries and to Cushing for further transportation toward the Gulf Coast. Enbridge said the acquisition also includes: A 51% ownership interest in the 240,000-barrel-per-day Powder River Gateway short-haul pipeline, which supplies volumes into Pony Express. Eight million barrels of crude oil storage across nine terminals. A connection to an additional 500,000 barrels per day of refining capacity. The Pony Express Pipeline 2 expansion, a 60,000-barrel-per-day project that is expected to join Enbridge’s secured growth backlog when the transaction closes.

Ebel said Pony Express provides Enbridge with a strategic link among the Bakken, Powder River and Denver-Julesburg basins and complements its existing Express-Platte pipeline system and Cushing terminal. He said the expansion reflects demand for transportation capacity along the corridor and will extend a portion of existing contracts into the next decade. Enbridge valued the Tallgrass acquisition at approximately 10 to 11 times estimated 2027 EBITDA, according to Ebel. He said the company expects that multiple to improve over time through synergies and growth capital.

The previously announced Salt Creek Midstream transaction covers the Orla and Wink North gathering systems, along with a 50% interest in the Delaware Crossing system. Each system includes a terminal and serves the Delaware Basin in the Permian. Ebel said the assets will give Enbridge direct connections to Permian producers and enable an integrated “wellhead-to-water” offering. That service chain includes gathering assets, long-haul transport on Enbridge’s Gray Oak Pipeline and export operations at the company’s Ingleside export facility. The acquired gathering systems have total capacity of 420,000 barrels per day and are currently moving about half that volume, according to Ebel.