Enbridge to Develop $1.4 Billion Norlite Diluent Pipeline

abarrelfull wrote on 03 Nov 2013 09:21
Tags: canada enbridge n-america pipeline

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Enbridge Inc. (TSX:ENB) (NYSE:ENB) today announced that it will develop a new industry diluent pipeline with associated capital of up to $1.4 billion, depending on scope, to meet the needs of multiple producers in the Athabasca oil sands region. The base 16-inch diameter scope for the project will be anchored by throughput commitments from the Fort Hills Partners (Suncor Energy Inc., Total E&P Canada Ltd. and Teck Resources Limited) for volumes for the proposed Fort Hills oil sands project and by Suncor Energy Oil Sands Limited Partnership (Suncor) for its proprietary oil sands production. The Norlite Pipeline remains subject to Suncor board approval, as well as customary regulatory approvals.

Enbridge anticipates securing additional long term commitments to the Norlite Pipeline in the near term which could result in an increase in scope to a 24-inch / 20-inch system. This Norlite system would be capable of transporting 270,000 barrels per day of diluent from Edmonton into the oil sands region and has the potential to be further expanded with the addition of pump stations to an ultimate capacity of over 400,000 barrels per day.

The pipeline will be constructed to Enbridge's Cheecham Terminal with an extension to Suncor's East Tank Farm, which is adjacent to Enbridge's Athabasca Terminal, and a potential lateral line to a new Enbridge Norealis Terminal to serve the needs of shippers in the production area Northeast of Fort McMurray. The targeted in-service date is the second quarter of 2017. The Norlite system may access certain existing capacity on Keyera's pipelines between Edmonton and Stonefell, thus avoiding the need to build new pipe in that corridor. In exchange for Enbridge's right to access capacity on the existing Keyera pipelines, Keyera may elect to participate in the new pipeline infrastructure as a 30 per cent non-operating owner.

"The Norlite Pipeline represents Enbridge's entry into the oil sands regional diluent pipeline business and will extend the pathway that was first created with the Southern Lights diluent pipeline into Edmonton," said Stephen J. Wuori, President, Liquids Pipelines and Major Projects. "With the Fort Hills Partners and Suncor anchoring the base volumes on the line and Enbridge's ability to upsize the pipeline, we are able to offer significant incremental capacity to efficiently supply the fast-growing demand for additional diluent in the oil sands region. Norlite will expand our service offerings in the Athabasca region where Enbridge can now provide diluent transportation service into the region to augment our already strong position in the transportation of diluted bitumen."

The initial term of the anchor transportation agreement is 25 years, with the Fort Hills Partners and Suncor having the right to extend the agreement for successive five-year terms. With this project and previously announced projects, Enbridge currently has a total of approximately $7 billion of commercially secured expansions of or additions to its Regional Oil Sands System which will go into service between 2014 and 2017.

• Enbridge to Develop $1.4 Billion Norlite Diluent Pipeline

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