Pembina Pipeline will acquire the US portion of the Cochin Pipeline from Kinder Morgan. Credit: WhisperToMe.

Pembina Pipeline has signed agreements to acquire Kinder Morgan Canada (KML) and the US portion of the Cochin Pipeline from Kinder Morgan (KMI) in a C$4.35bn ($3.26bn) deal.

Pembina will acquire strategic assets as part of the transaction, including Cochin Pipeline System, the Edmonton storage and terminal business, as well as 125 acre bulk storage and export/import business Vancouver Wharves.

With a strategic alignment with Pembina’s existing conventional and oil sands pipelines, the storage business also includes direct connectivity to two rail terminals.

The Vancouver Wharves bulk marine terminal facility transfers more than four million tonnes of bulk cargo a year.

The strategic acquisition will enable Pembina to enhance its market diversification as a provider of integrated services to hydrocarbon producers in Western Canada.

Pembina president and CEO Mick Dilger said: “This acquisition is highly strategic for Pembina, providing enhanced integration with our existing franchise, entrance into exciting new businesses and clear visibility to creating long-term value for our shareholders.

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“It represents an ideal opportunity to continue building on our low-risk, long-term, fee-for-service business model while extending our reach into the US through a highly desirable cross-border pipeline.”

The Cochin system features 1,810-mile, 12in-diameter multi-product pipeline spanning across Fort Saskatchewan, Alberta, Canada to Windsor, Ontario, Canada.

It connects Pembina’s Channahon, Bakken and Edmonton area assets and is linked to markets in Mont Belvieu, Conway and Edmonton.

Pembina senior vice-president and chief financial officer Scott Burrows said: “This transaction strengthens the quality of Pembina’s adjusted EBITDA, is accretive to adjusted cash flow per share and fits squarely within Pembina’s financial guardrails.”

The transaction is expected to close in the first half of next year.

KMI CEO Steve Kean said: “It enables KMI to reduce leverage and gives us the flexibility to create additional value for shareholders through share buybacks, project investments, or both.”

Last September, Kinder Morgan intended to divest the Canadian section of the Cochin pipeline, which transports light hydrocarbon liquids between the US and Canada.