La Caisse invests $850m in US pipeline

The Canadian pension manager, with $151.7bn in assets, is moving in on US energy transport, acquiring a 16.5% stake in a US oil and gas pipeline from ConocoPhillips.

Canadian pension manager Caisse de depot et placement du Quebec is taking a position in a major oil and gas pipeline that runs along the US Gulf Coast.

La Caisse agreed to purchase a 16.5 percent stake in the Colonial Pipeline Company and Colonial Ventures from owner ConocoPhillips in an $850 million transaction. The deal is expected to close in the first quarter of 2012.

The Colonial Pipeline runs along thousands of kilometers across the Gulf of Mexico and northern US states. It has the capacity to carry some 2.3 million barrels of fossil fuels daily, and is considered the “largest refined petroleum products pipeline” in the country, according to La Caisse.

“The Caisse is always interested in quality assets that yield stable, long-term returns,” noted La Caisse executive vice president, private equity and chief operations officer, Normand Provost, in a statement. “This particular investment targets an infrastructure project in a regulated industry that we know well through our investments in Gaz Metro, Interconnector, Enbridge and Fluxys.”

The strategic move by La Caisse comes amid a recent decision by the US to postpone production of a cross-border pipeline initiative, the TransCanada Keystone XL facility, for further environmental review. Keystone XL would extend the delivery of oil sands originating in Alberta, Canada and would compete with the Colonial Pipeline in the Gulf.