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Enbridge Inc., the Canadian energy infrastructure giant, reached an agreement to buy Tallgrass Energy’s crude oil business from Blackstone Inc. for about US$2.6 billion.
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The deal includes 75 per cent of the Pony Express Pipeline, 51 per cent of the Powder River Gateway system and 8.4 million barrels of storage capacity, according to a statement Wednesday.
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Bloomberg reported earlier that Enbridge was in advanced talks to buy the pipeline. Enbridge shares fell as much as 2.6 per cent after the deal was announced.
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The deal, expected to close later in 2026, is a test of whether the tariff war between the U.S. and Canada will bleed into one of the sleepier corners of the M&A market: energy pipelines. The Pony Express carries crude oil about 900 miles from oil fields in the Rocky Mountain region to Cushing, Oklahoma, one of the busiest pipeline hubs in the world.
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It is the second largest Canada-to-U.S. M&A deal this year, and the biggest since trade talks collapsed between the two countries in August, according to data compiled by Bloomberg.
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While it’s not clear how the deal will be viewed in Washington, U.S. President Donald Trump has taken a keen interest in oil pipelines in the past. He signed a presidential permit in April authorizing the expansion of the Bridger pipeline to carry Canadian oil to Wyoming. That project is a partial revival of the Keystone XL Pipeline, which the president sought to revive during his first term.
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While Enbridge is based in Calgary, it has a massive presence in the U.S., with a pipeline network that carries oil from Western Canada and U.S. natural gas supplies to utilities, refineries and liquefied natural gas export terminals across the continent. At the time of its US$28 billion purchase of Spectra Energy in 2017, Enbridge became the largest energy pipeline and storage company in North America.
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The Powder River Gateway system moves crude from the Powder River Basin to a pipeline hub at Guernsey, Wyoming. Enbridge is also buying Stanchion Energy, a crude marketing business, through the deal.
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Blackstone Infrastructure Partners LP took Tallgrass Energy private in 2020.
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Citigroup Inc. was Enbridge’s financial advisor on the deal. Sidley Austin LLP and Sullivan & Cromwell LLP were the legal advisors.
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