Rigs: The total US rig count decreased to 604 the week of Sept. 5.
Infrastructure: Enbridge is acquiring Tallgrass Energy’s crude oil portfolio for $2.55B, giving the crude giant a new direct route from the Rockies to Cushing.
Supply and Demand: The US natural gas pipeline sample, a proxy for change in oil production, increased 0.7% W-o-W across all liquids-focused basins for the week ending Sept. 13.
Rigs:
The total US rig count decreased to 604 for the week of Sept. 5. Liquids-driven basins decreased to 468, down 3 rigs W-o-W.
- Anadarko (+1): Flywheel Energy
- Bakken (+1): Murfin Drilling
- DJ (+1): Bison Operating
- Eagle Ford (-1): GeoSouthern Energy
- Powder River (+1): EOG Resources
- Permian (-3)
- Midland (-4): Exxon, Fasken Oil & Ranch, Iron Orchard, Estacado Resources, and Beryl Oil & Gas
- Delaware (+1): EOG Resources
Infrastructure:
Enbridge (ENB) is extending its turf through the Rockies to Cushing. The company has inked an agreement to purchase Tallgrass Energy’s crude oil portfolio for $2.55B in cash.
The deal announced last Wednesday (Sept. 9) includes Tallgrass’ 75% interest in Pony Express, 51% interest in Powder River Gateway, 8 MMbbl of crude oil storage across nine terminals (six wholly owned and three partially owned), plus the Stanchion Energy crude marketing business.
The purchase price places a forward enterprise value on the Tallgrass assets at 10-11x EBITDA, Enbridge said. ENB will fund the acquisition through a 50/50 split of debt and cash raised from an equity issuance. The companies expect to close the transaction later in 2026.
Pony Express is a critical outlet for Guernsey crude because it provides the only direct pipeline route from Wyoming to the Cushing hub in Oklahoma. Other takeaway options, including the Suncor, Seahorse and Cheyenne pipelines, are smaller systems that move barrels south into the Denver-Julesburg Basin rather than directly to Cushing.
The Pony Express asset base consists of Pony Express Pipeline and the Seahorse Pipeline, which is a capacity lease on Pony Express. FERC filings show flat revenue and a declining earnings profile for both entities, driven by increased fuel costs and higher operating expenses on Pony Express.
Pony Express primarily sources crude from the Powder River and Bakken basins; throughput leaving Guernsey has averaged ~311 Mb/d over the past 12 months. Farther downstream, the system also receives DJ barrels via its Colorado lateral. Volumes through the lateral have averaged ~122 Mb/d over the same period, helping fill Pony Express toward its ~460 Mb/d nameplate capacity into Cushing.
The Powder River Gateway system serves as a key outlet for Powder River crude, combining the Iron Horse and Powder River Express pipelines with associated terminal and storage infrastructure at the Guernsey hub. The system is located at the north end of Pony Express and serves as a feeder to the pipeline. Powder River Gateway throughput and earnings exhibit seasonality, with 3Q typically being the highest earning quarter each year.
The deal also includes the PXP2 growth project, a $300MM expansion of Pony Express that will increase capacity to ~515 Mb/d. PXP2 is underpinned by take-or-pay contracts and is expected to enter service in late 2027. Upon closing of the transaction, PXP2 will be added to ENB’s $41B secured growth backlog. The Tallgrass assets will increase Enbridge’s total delivery capacity into Cushing to 1,428 Mb/d. ENB’s ownership in Cushing-bound pipelines is shown in the table.
Enbridge Levers M&A for Crude Market Share
While many of its midstream peers are focused on natural gas, Enbridge is making a play for a larger share of the crude oil business.
The latest transaction follows on the heels of its $600MM acquisition of Salt Creek Midstream’s crude gathering business in the Permian Basin. The Salt Creek assets move Enbridge further upstream in the Permian, giving it control of barrels to feed exports at its Ingleside Energy Center in Corpus Christi.
The Tallgrass deal creates another key conduit to a market hub. Previously, Enbridge’s only route from the Rockies region to Cushing was to move barrels through the Platte Pipeline, then onto Flanagan or Spearhead at the Salisbury Terminal. The acquisition gives Enbridge a direct Rockies-to-Cushing foothold, strengthening its position across key crude transportation and storage assets in the region.
Supply and Demand:
The US natural gas pipeline sample, a proxy for change in oil production, increased 0.7% W-o-W for the week of Sept. 13 across liquids-focused basins.
Volumes increased in the Gulf of America (+6.6%), Permian (+2.6%), Barnett (+2.8%) and Arkoma (+0.7%). Offsetting some of that growth were decreases in the Rockies (-0.4%), the Eagle Ford (-1.4%), and the Bakken (-0.9%), while volumes in the Anadarko remained flat (0%). The Rockies and the Gulf of America have a high correlation between gas volumes and crude oil volumes, whereas the Permian and Eagle Ford basins correlation is less than 45%.
As of Sept. 14, there are no current refinery outages.
Vessel traffic monitored by East Daley along the Gulf Coast decreased W-o-W. A total of 23 vessels were loaded for the week ending Sept. 12, down three from the prior week.