Lakehead To Proceed With Third Phase of Terrace Expansion Project

abarrelfull wrote on 16 Jan 2014 12:18
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6/28/2001

Lakehead Pipe Line Partners, L.P. (NYSE: LHP) today announced it has industry approval to proceed with the third phase of its Terrace Project to expand the capacity of its mainline system.

Terrace Phase III involves the construction of 120 miles of new 36-inch pipeline over five separate construction segments on the Lakehead System between Clearbrook, Minn. and Superior, Wis., at an estimated cost of $200 million. Enbridge Pipelines Inc., which owns the upstream Canadian system that connects with Lakehead at the international border near Neche, N.D., will concurrently construct additional facilities to meet the new transportation capacity potential. The joint project will add approximately 140,000 barrels per day of incremental capacity to the pipeline system, completing the Terrace Expansion project first announced in 1997.

Lakehead President, Dan Tutcher, said, "The decision by our customers to proceed with the next phase of the Terrace Expansion reflects the positive production outlook for western Canadian heavy and synthetic oil and producers' transportation needs for increased access to U.S. markets. The continuing positive outlook underpins our forecast that delivery volumes on the Lakehead System will increase to record levels by the end of 2002 and continue to increase for several years following. Increased utilization of system capacity will ratchet up returns on the expansion projects, thus enhancing profitability and supporting our strategy to grow the level of cash distributions made to unitholders."

The permitting process in the U.S. is currently in progress. Pending regulatory approval, construction would commence as early as January 2002, with an in-service date of mid-2003. Regulatory applications will be filed by Enbridge, with the National Energy Board in Canada by the fourth quarter of 2001.

The Terrace Expansion is a phased approach to pipeline expansion, with each phase proceeding as required by producers. When the third phase is completed, Terrace Expansion will have cumulatively provided an additional 350,000 barrels per day of system capacity for Western Canadian producers seeking greater access to U.S. Midwest markets.

The first phase of the Terrace project involved the construction of 485 miles of new 36-inch pipeline over 15 separate construction segments between Kerrobert, Saskatchewan and Clearbrook, Minn. The $140 million U.S. portion of the phase was completed in the spring of 1999 and added 170,000 barrels per day of incremental capacity to the Lakehead mainline system.

The second phase of the Terrace project, which will increase the capacity of the Enbridge System to deliver to the Lakehead System, by 40,000 barrels per day, was recently approved by the Canadian National Energy Board. Construction is scheduled to commence in the summer of 2001, with a planned in-service date by the first quarter of 2002.

• Lakehead To Proceed With Third Phase of Terrace Expansion Project

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