Joint venture would ship crude from Illinois hub to refinery market.
February 15, 2013
by Canadian Press
CALGARY – Enbridge Inc. and a partner are planning to convert some of their natural gas capacity to ship crude oil from a pipeline hub in Illinois to refineries in the eastern Gulf Coast refinery market.
The Calgary-based pipeline company and Energy Transfer Partners would each own 50% of the joint venture, which they expect to be in service by 2015.
The plan requires US regulatory approvals and Enbridge says its participation will depend on getting a minimum commitment from customers.
The companies say the system would be able to carry between 420,00 and 660,000 barrels per day of crude.
The latest proposal would redeploy a variety of existing pipelines, including part of Energy Transfer’s Trunkline natural gas system, as well as Enbridge’s new Southern Access Extension, which is under development.
Once completed, the joint venture system would span more than 1,000 kilometres from Patoka, Ill., to St. James, La.
The proposal is one of several initiatives being considered to move more crude from the US Midwest and Canadian Prairies to refineries along the coast of the Gulf of Mexico.
Canadian crude is currently being sold at a bigger discount than usual because of a lack of pipeline capacity and growing supplies from North Dakota and other states that are expanding output using advanced drilling methods.
“Connecting the Patoka hub to the St. James hub is an important component of our broader plans to open up access to the eastern Gulf Coast crude oil market and responds to significant interest from both producers and refineries,” said Al Monaco, Enbridge’s president and chief executive officer.
Mackie McCrea, president and chief operating officer of Energy Transfer Partners, said the joint venture would help solve bottlenecks in the North American pipeline system and optimize ETP’s assets.
“Energy Transfer looks forward to developing this project with Enbridge and to establishing a key transportation conduit to link a diversified slate of reliable, long-term crude oil reserves to refineries along the eastern Gulf Coast, while increasing Energy Transfer’s footprint in crude oil transportation,” McCrea said.
However, the safety and environmental impact of oil pipelines has come under increased scrutiny in recent years, particularly after a major spill from an Enbridge pipeline into Michigan’s Kalamazoo River.
Environmentalists, local politicians, landowners and First Nations communities have raised objections to several major projects, including Enbridge’s Northern Gateway and TransCanada’s Keystone XL.
Keystone XL would carry crude and oilsands bitumen from Canada and the northern United States to southern refineries while Enbridge’s Northern Gateway would link Alberta producers to export terminals on the B.C. coast.
© 2013 The Canadian Press