Enterprise and Enbridge to Develop Crude Oil Pipeline from Cushing to the Gulf Coast

abarrelfullabarrelfull wrote on 03 Oct 2011 05:37
Tags: enbridge enterprise oil pipeline usa

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Enterprise Products Partners L.P. (NYSE: EPD) ("Enterprise") and Enbridge Inc. (NYSE/TSX:ENB) ("Enbridge") today announced plans to design, construct and operate a new pipeline to transport crude oil from the oversupplied hub at Cushing, Oklahoma to the Texas Gulf Coast refining complex. Initially, the Wrangler Pipeline will have the capacity to transport up to 800,000 barrels per day (BPD) of crude oil and accommodate the constrained medium-to-light crude oil currently stranded at Cushing and priced at a substantial discount to the oil imports that account for most of the supply being used by Gulf Coast refiners. The pipeline will also have the capability to handle additional supplies of crude oil arriving at Cushing from other North American producers. In anticipation of future increases in crude oil volumes delivered to the Cushing area, the joint venture partners will design the pipeline to be easily expanded.

The proposed 36-inch diameter pipeline will originate at the existing Enbridge Cushing Terminal and extend approximately 500 miles (800 kilometers) southward, closely following existing pipeline corridors, to Enterprise's ECHO crude oil storage terminal in southeast Harris County, Texas, providing access to refineries in Texas City, Pasadena/Deer Park, Baytown and along the Houston Ship Channel. New storage tankage necessary for pipeline operations will be located at the ECHO site and included in the joint venture. The project will also include a new 85-mile (137-km) pipeline to the Beaumont/Port Arthur refining center.

"We are extremely pleased to partner with Enbridge on this important project and believe that our complementary skills and shared strategic vision will help ensure success, and offer the most efficient and expedient solution for meeting the industry's need for additional crude oil pipeline infrastructure," said Michael A. Creel, president and chief executive officer of Enterprise's general partner. "This pipeline will be able to transport all grades of crude oil in batched configuration to meet the diverse needs of shippers, allowing producers to maximize the value of their crude oil and provide a more reliable source of domestic supply for Gulf Coast refiners."

"The Wrangler Pipeline will offer flexible solutions to shippers seeking to move crude oil out of the Cushing hub, solving the current lack of transportation options following recent changes in supply routes in North America," said Patrick D. Daniel, president and chief executive officer, Enbridge Inc. "We're pleased that Enterprise shares our vision to design this pipeline to meet the needs over the long-term as the Cushing Hub continues to attract both light and heavy production from North American producers. Combining Enbridge's large storage position at Cushing, with Enterprise's ECHO terminal in Houston will provide tremendous connectivity for the industry."

U.S. Midcontinent crude oil supplies are growing rapidly and that trend is expected to continue as a result of the development of shale plays such as Bone Springs/Avalon, Bakken, Niobrara and Barnett. Additionally, refiners and oil producers are seeking new pipeline routes south of Cushing rather than the historical northerly supply routes out of that crude oil hub. Another important driver of this project is the demand by Gulf Coast refineries for Western Canadian crude oil supplies, which have been growing since Alberta oil first accessed the Cushing Hub over the last decade. The Wrangler Pipeline will be designed to accommodate quality-controlled batches of a variety of grades and sources of crude oil, providing options for economical, efficient and safe transportation of crude oil.

Open season to begin October 3, 2011

Also today, Enterprise and Enbridge announced plans for a binding open commitment period for available capacity on the new pipeline, which will begin at 8 a.m. CDT, Monday, October 3, 2011, and continue until 5 p.m. CDT Wednesday, November 2, 2011. Subject to the required regulatory approvals and sufficient long-term commitments from interested shippers, the pipeline is expected to be in service by mid-2013. Construction of the project is expected to be managed by Enbridge with Enterprise serving as operator.

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