Enbridge to Expand Access to Eastern Markets for Western Crude Oil

abarrelfullabarrelfull wrote on 04 Oct 2011 11:19
Tags: canada enbridge oil pipeline usa

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Enbridge Inc. (TSX:ENB) (NYSE:ENB) and Enbridge Energy Partners, L.P. (NYSE:EEP) ("EEP", or the "Partnership") announced today two projects that will provide increased access to refineries in the U.S. upper midwest and in Ontario, Canada for light crude oil produced in western Canada and the U.S. The project involves the expansion of EEP's Line 5 light crude line between Superior, Wisconsin and Sarnia, Ontario by 50,000 barrels per day, at a cost of approximately $100 million. Complementing the Line 5 expansion, Enbridge plans on reversing a portion of Line 9 in western Ontario to permit crude oil movements eastbound from Sarnia as far as Westover, Ontario, at a cost of approximately $20 million. Subject to regulatory approvals, both projects are targeting to be in service in late 2012.

The expansion of Line 5 and reversal of Line 9 between Sarnia and Westover can be economically achieved with upgrades or modifications of facilities and does not require installation of new pipeline.

The project will enable growing light crude production from the Bakken shale and from Alberta to meet refinery needs in Michigan, Ohio and Ontario. The project provides another much needed transportation outlet for light crude, mitigating the current discounting of supplies in this basin while also providing more favourable supply costs to refiners currently dependent on crudes priced off of the Atlantic basin.

"We are pleased to be able to provide this high value solution to our shippers," said Stephen J. Wuori, President, Liquids Pipelines, Enbridge Inc. "With a Brent-to-WTI differential running in excess of $20 per barrel, compared with the historical parity relationship, there is significant value to be captured by increasing the pipeline capacity to move western Canadian and Bakken light crude supply to eastern refiners. This project will utilize the international joint toll (IJT) feature provided for in the new Enbridge Competitive Toll Settlement, which will enable us to provide an attractive toll from western Canada all the way through to refiners in the U.S. upper Midwest and Ontario.

"This is an attractive project for EEP," added Mark Maki, President of the Partnership. "The project can be undertaken generally within our existing rights of way and will utilize a standard FERC cost of service model that will provide additional distributable cash flow to the Partnership once the project is placed into service."

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