Enbridge Acquires All of Spectra Energy's Outstanding Shares for $3.3 Billion

Spectra Energy Partners LP will sell all its outstanding shares to Enbridge Inc. in an agreement made last week as Enbridge aims to streamline its corporate structure in the wake of U.S. tax changes.
Based on Thursday’s closing prices of Enbridge shares in New York trading, the agreement to acquire its master limited partnership is valued at $3.3 billion.

The acquisition follows the Calgary-based company’s acquisition of Spectra Energy Corp. for $28 billion, creating the largest energy pipeline and storage company in all of North America.

Williams Cos. And Energy Transfer Partners LP have ditched the MLP model after losing a key federal tax benefit in March. Enbridge cited the “significant weakening of MLP capital markets” and how it affects forward growth for the unit.

“We view this as a positive step toward reducing corporate complexity,” Tudor, Pickering, Holt & Co. said in a note by analysts on Friday.

The transaction is scheduled to close in the fourth quarter of 2018.

Houston Chronicle

Enbridge, Williams Consolidate Respective Pipeline Assets After New Tax Policy

Enbridge Inc and Williams Cos are consolidating their respective pipeline assets after the Federal Energy Regulatory Commission in March proposed a tax overhaul that removes specific benefits for master limited partnerships.

Enbridge plans to bring its independent units and liquids and gas pipeline assets under a single listed entity valued at US$8.94 billion.

Williams said it would buy out the remaining stake in its MLP Williams Partners LP in a $10.5 billion deal.

These decisions come after FERC said in March that MLPs, specifically oil and natural gas pipeline companies, would no longer be able to recover an income tax allowance as part of the fees they charge to shippers as a cost of service.

Enbridge also added that it would buy outstanding shares of Spectra Energy Partners and Enbridge Energy Partners, to name a few. The transaction will not affect the stakes held by shareholders in those companies, Enbridge said.


Washington Gov. Signs Measure to Boost Oil Transportation Safety in State

Washington Governor Jay Inslee on Friday signed a law improving oil transportation safety to protect state waterways from contamination.

The legislation includes the intent to raise funds that would be used in the prevention of oil spills as well as in the development of tighter preparedness plans that would be followed if oil were to contaminate waterways.

The measure also extends the state's oil barrel tax to pipelines, which currently pays for spill response prevention measures for oil received by train or vessels.

The Department of Ecology must increase coordination with Canadian partners to increase safety, data sharing, and to talk about issues related to reducing oil spill risk and navigational safety.

The DOE must also practice equipment deployment drills every three years for onshore and offshore sites, according to the measure.

The Spokesman-Review

Plains All American Pipeline CEO Says Proposed Steel Tariff Could Hurt U.S. Pipeline Construction

CEO of Plains All American Pipeline Greg Armstrong said Monday at a Houston conference that he believes the proposed steel tariffs introduced by President Trump last week could hurt pipeline construction in the U.S.

Armstrong said at the CERAWeek by IHS Markit conference that specific parts needed for pipelines, such as certain types and sizes of pipe as well as specific wells and valves are only available outside of the country.

President Trump last Thursday said the U.S. would impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports starting this week. So far nothing has been pushed forward or gone into writing.

Pipeline projects are surging, and Armstrong says his company needs some flexibility to be able to move forward as Plains currently has about $1.5 billion of projects underway.

Armstrong did praise the state of the permitting and regulatory process, saying it has improved since Trump took office.

Fuel Fix

Pipeline Companies Fight to Keep Tax Breaks on Construction Project Costs

Pipeline companies are asking House Republican leaders to adjust the tax reform bill that would drastically shrink tax breaks and limit how much interest they can deduct from borrowing costs on construction projects.

As Congress nears a critical vote on the legislation, pipeline companies are fighting to maintain the tax breaks that allow them to deduct from the borrowing costs of construction projects that take them years to permit and build.

The Interstate Natural Gas Association of America, which has representatives from pipeline companies like Enbridge and Kinder Morgan, sent a letter House Republican leaders asking them to adjust a provision in the bill that would limit how much they can deduct.

The association wrote that failure to maintain the current deduction limit could result in higher cost of capital for pipeline and other infrastructure projects in the future, which would also raise energy costs for consumers.

Senate and House Republicans hope to send the legislation to President Trump to sign before the end of the year.

Houston Chronicle

Mexican Official: Proposed Border Tax Could Negatively Affect U.S.-Mexico Energy Trade

A senior Mexican official said on Wednesday that the U.S.-proposed border tax and import tax could be harmful for energy trade between the two countries and could possibly cause oil refiners to raise consumer prices.

The Trump administration has pitched a 20 percent border tax on Mexican imports as a way to force Mexico to pay for Trump's signature border wall. The administration also proposed a tax they call a border adjustment that would tax imports but not exports.

"Our position continues to be that free trade and the free flow of these goods has benefited both countries, strengthening the energy security of both," said Aldo Flores, Mexico's deputy energy minister for hydrocarbons, when discussing how the taxes would affect sectors like oil refiners, automakers, and others.

Mexico and the U.S. have practiced a healthy energy trade for several decades, with Mexican crude oil being sold to U.S. refiners while U.S. natural gas and fuels are sold to Mexico.

Mexico is worried, however, that the newly-approved Keystone XL crude oil pipeline, which would move heavy crude from Canada to the U.S., could affect the competitive playing field for Mexico as it would have to find more creative ways to market its output.