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Enbridge to spend $4B on oil sands pipeline

Enbridge is investing $4 billion in new construction to bring oil sands crude to the US Gulf and help ease a bottleneck that has led to a supply glut in the Midwest.


March 27, 2012
by CANADIAN PRESS

CALGARY: Pipeline builder Enbridge Inc. is investing $4 billion in a new round of construction to bring oil sands crude to the US Gulf and help ease a bottleneck that has led to a glut of supply in the Midwest.

Enbridge said it will expand its Flanagan South Pipeline from Flanagan, Ill. to Cushing, Okla. to a 36-inch diameter line with a capacity of 585,000 barrels per day.

The Flanagan pipeline, expected to be in service by mid-2014, will be built along the route of Enbridge’s existing pipeline from southeast of Chicago to Oklahoma.

In a separate announcement, Enbridge said it will twin a jointly owned Seaway Pipeline from Cushing to the US Gulf Coast at Houston.

The expansion, which includes an extension of the pipeline to Port Arthur-Beaumont, will add 450,000 barrels of capacity to that system.

Both projects will cost Enbridge $3.8 billion, including $2.8 billion for the Flanagan project and $1 billion for the Seaway Pipeline twin line and extension.

The new construction will relieve a supply glut of oil in the middle of the US and boost prices and producers’ bottom lines.

“Enbridge’s Gulf Coast Access projects give Bakken and western Canadian producers timely, economical and reliable options to deliver a variety of crudes to refinery hubs throughout the heart of North America and now as far as the Gulf Coast,” said Patrick Daniel, Enbridge’s chief executive officer.

“The commitments secured in these open seasons will support additional infrastructure to meet the growing transportation needs of these producers and the U.S. Gulf Coast refiners, contributing to North America’s energy security into the foreseeable future.”

Aside from Enbridge’s extensive network of oil pipelines, oil sands crude can get to the U.S. market now through TransCanada’s base Keystone system, which currently delivers crude to the US Midwest and Cushing.

TransCanada recently announced plans to build the most urgently needed portion of its controversial Keystone XL oil pipeline as a US$2.3-billion stand-alone project.

Last week, US President Barack Obama pushed for the speedy approval for the southern leg of TransCanada’s Keystone XL pipeline as he insisted oil has an important place in his national energy plans.

TransCanada’s Gulf Coast project will be subject to regulatory approvals, but because it will not cross the Canada-US border, it will not need the U.S. presidential approval that tripped up the company’s original proposal to pipe crude from Alberta to Texas.

Enbridge is Canada’s largest transporter of crude oil, with about 24,613 kilometres of crude pipeline, delivering on average more than 2.2 million barrels per day of crude oil and liquids.

Oilsands producers say there’s enough pipeline capacity from Canada to the US for now, but their planned expansion in the years ahead depends on new pipelines – the full Keystone XL or Enbridge’s Northern Gateway pipeline across northern BC to the West Coast. Some have touted rail transport as a stopgap solution.

On Keystone XL, the State Department dealt TransCanada two blows in recent months. In the fall, it delayed a decision until early 2013 so TransCanada could work out a new route through Nebraska to avoid ecologically sensitive areas.

© 2012 The Canadian Press