OMERS acquires Texas oil pipeline in $1.4bn deal

The move for BridgeTex marks the Canadian pension’s ‘re-entry’ into the US midstream sector and its third energy deal in the country this year.

The infrastructure investment division of the Ontario Municipal Employees Retirement System agreed to pay $1.4 billion for a majority stake in a crude oil pipeline servicing drilling basins, refineries and port terminals in Texas.

OMERS Infrastructure, which manages around $17 billion in assets, said it is acquiring a 50 percent stake in the BridgeTex Pipeline Company, the holding unit for the BridgeTex pipeline, which transports around 400,000 barrels of crude oil per day between Colorado City in West Texas to refineries and port terminals in Houston.

The infrastructure investment arm of the C$95 billion ($72.8 billion; €62.9 billion) Canadian pension, is buying a 30 percent stake in the pipeline company from Plains All American Pipeline, an energy infrastructure-focused master limited partnership, which will retain a 20 percent interest in the company. It is acquiring an additional 20 percent from Magellan Midstream, another publicly traded midstream vehicle. Magellan is keeping a 30 percent stake in BridgeTex and will continue to operate the pipeline.

As the outlook for US oil production looks promising, OMERS and the other investors in BridgeTex plan to expand its pipeline system, including by around 40,000 barrels per day by early 2019. Michael Ryder, OMERS Infrastructure’s senior managing director for the Americas, said in a statement the investment is “consistent” with the pension’s strategy to build long-term partnerships for infrastructure deals.

“The addition of BridgeTex marks our re-entry into the US midstream sector and is a welcome addition to our high-quality infrastructure portfolio,” Ryder said. It is unclear whether the pension fund has invested in US midstream before. According to OMERS’ website, the only other US assets in its portfolio are the Chicago Skyway toll road; MCV, the largest natural gas-fired combined heat and power plant in the country; and Oncor, an electricity transmission and distribution company in Texas. OMERS Infrastructure declined to comment.

The deal is the third in the US energy sector for OMERS Infrastructure this year, following the purchase of a 24 percent stake in Puget Sound Energy, Washington State’s oldest regulated energy utility, earlier this month. In March, OMERS Infrastructure also agreed to acquire Leeward Renewable Energy, an owner, operator and developer of wind projects in the US across 19 operating projects with a total installed capacity of 1.7GW, from ArcLight Capital Partners.