Enbridge (ENB), already North America’s largest crude pipeline player, is extending its footprint 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 the Powder River Gateway system, 8 MMbbl of crude oil storage across nine terminals (six wholly owned and three partially owned), plus the Stanchion Energy crude marketing business (see map from Enbridge Investor Relations).
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.
The assets are all included in East Daley Analytics’ Crude Hub Model. Pony Express is a critical outlet for Guernsey crude, providing 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 through the Denver-Julesburg Basin, rather rather than directly to Cushing.
The Pony Express asset base consists of Pony Express Pipeline and Seahorse Pipeline, which is a capacity lease on Pony Express. Federal Energy Regulatory Commission (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 (see figure below).
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. – Keland Rumsey and London Spivey, CFA Tickers: ENB.
Can Crude and NGL Markets Keep Pace with the US LNG Boom?
Rising US LNG feedgas demand has the potential to float all boats — but only if crude oil and NGL markets can support the growth.
Reaching nearly 26 Bcf/d of LNG feedgas demand by the end of 2027 will require producers to drill aggressively across the Permian, Haynesville and Northeast. In the Permian especially, that growth depends on steadier crude prices, to give producers the confidence to commit capital, subscribe to new pipeline capacity and fill the infrastructure midstream companies must build.
Join East Daley Analytics on Wednesday, Sept. 30 as we examine the cross-commodity conditions required to keep the LNG growth story on track:
- What crude price environment will support sustained drilling and pipeline investment?
- Could Permian crude constraints limit associated gas production?
- Where could NGL processing, takeaway and export bottlenecks emerge?
- Which companies are best positioned to capitalize?
LNG demand may be the rising tide — but crude and NGL markets will determine whether all boats can rise with it.
Join East Daley Analytics on Sept. 30 at 10:00 am MT for a discussion at the intersection of energy. Click here to reserve your spot today.
One Market, One Model: Gain a Holistic View of North America Supply & Demand
East Daley Analytics is pleased to announce the Canada Supply & Demand report. The Canada S&D completes our North American model, providing a fully integrated supply and demand forecast for crude oil and natural gas. East Daley follows molecules from Canadian production through US infrastructure to end-markets. Clients now have a continental view to anticipate trends, from how Canadian gas is reshaping Midwest markets, to how crude imports flow to Gulf Coast refiners. The Canada S&D report and dataset is available exclusively in Energy Data Studio. Reach out to learn more about East Daley’s North American energy model.
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