As part of a $3 billion transaction, the largest US crude oil export center was sold to Enbridge
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Canadian pipeline company Enbridge purchased assets for US$3 billion, including the Texas crude oil export terminal with the largest output in North America, betting on continued strength in U.S. energy production.
The company will acquire the Ingleside Energy Center near Port of Corpus Christi, and hold shares in several pipelines from inland oil fields to the Gulf Coast, as all cash in the assets owned by Moda Midstream backed by private equity Part of the transaction.
The agreement came as US oil drillers withdrew their production targets after a decade-long blitzkrieg of growth and shifted their focus to profits instead of extracting more crude oil. The Calgary-based Enbridge transaction is based on continued strong exports.
“In the past few years, we have established a strong position on the U.S. Gulf Coast through natural gas and crude oil infrastructure,” said Enbridge CEO Al Monaco. “Our strategy is driven by the important role played by low-cost, sustainable North American energy supplies in meeting growing global demand.”
Most US crude oil exports were banned by law in 2015. Shipments surge After Congress overturned the ban in response to the rapid increase in production in shale regions such as the Permian Basin and Eagle Ford, Texas.
Although the pandemic has dealt a major blow to production, US crude oil exports have remained stable for the past 18 months. Enbridge said the transaction will “significantly advance” its Gulf Coast export plan. In 2020, about a quarter of U.S. crude oil exports go through Ingleside.
After the transaction was announced, Enbridge’s stock price rose by approximately 1%.
The plunge in oil prices last year has accelerated the U.S. producers’ move away from the strategic focus of growth at all costs. U.S. crude oil production currently averages about 11.3 million barrels per day, far below the peak of nearly 13 million barrels per day before the pandemic.
Nevertheless, US exports have remained relatively good, with oil shipments in June at approximately 3.4 mb/d, compared to 3.6 mb/d in March 2020. Analysts said that Texas output growth will boost future export prospects.
Karim Fawaz, an analyst at consulting firm IHS Markit, said: “The Permian is still expected to grow in the next ten years, and as export supplies increase.”
this pipeline Fawaz added that the shares acquired with the Ingleside export facility also provide Enbridge with “clear integration advantages”.
This deal may be the beginning of the so-called new wave of integration Midstream As part of the oil and gas business, analysts have been predicting this is because the prospects for the construction of major new pipelines are bleak.