Enbridge's $2.6 Billion Sandpiper Project Secures Anchor Shipper, Reinforcing Light Oil Market Access Program

abarrelfullabarrelfull wrote on 26 Nov 2013 18:40
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Enbridge Energy Partners, L.P. (NYSE:EEP) ("Enbridge Partners" or "the Partnership") and Enbridge Inc. (TSX:ENB) (NYSE:ENB) ("Enbridge") today announced that Marathon Petroleum Corporation ("MPC") has been secured as an anchor shipper for the $2.6 billion Sandpiper Pipeline Project ("Project") component of Enbridge's overall $6.2 billion Light Oil Market Access Program ("LOMA Program") which was announced on December 6, 2012. The Sandpiper Pipeline Project will be integrated with the Partnership's North Dakota System. MPC will fund 37.5% of the Project in exchange for an approximate 27% equity interest in the North Dakota System.

The LOMA Program consists of several distinct projects which will collectively allow an additional 400,000 barrels per day (bpd) of light crude oil from Western Canada, and from the Bakken formation in North Dakota, to access premium markets in Eastern Canada and the U.S. Midwest. The Program includes the 300,000 bpd Southern Access Extension Pipeline from Flanagan to the Patoka, Ill. hub; an 80,000 bpd upsize of the Line 9 reversal project to move crude oil from Sarnia, Ont. to refineries in Ontario and Quebec; and enhancements to the flexibility of Enbridge's mainline in Western Canada. These projects are all funded by Enbridge Inc. The Program also includes an upsize of the Eastern Access Program U.S. mainline expansion project between Griffith, Ind. and Sarnia, which is being jointly funded by the Partnership and Enbridge. Sandpiper, which will now be jointly funded by the Partnership and MPC, is a critical component of the LOMA Program because it ties rapidly expanding production from the Bakken into the rest of the Program. The securement of a significant committed shipper on Sandpiper complements existing commitments on the Southern Access Extension and Line 9 reversal projects and reinforces the overall program.

The Sandpiper Project will expand and extend the Partnership's North Dakota feeder system. The Bakken takeaway capacity of the Partnership's North Dakota System will be expanded by 225,000 bpd to a total of 580,000 bpd with a target in-service date of early 2016. The expansion will involve construction of a 24-inch diameter line from Beaver Lodge, ND, to Clearbrook, Minn., and a 30-inch diameter line from Clearbrook to the Superior, Wis., mainline system terminal. The new line will serve as a twin to the existing 210,000 bpd North Dakota System mainline, which now terminates at the Clearbrook Terminal, adding 225,000 bpd of capacity on the twin line between Beaver Lodge and Clearbrook and 375,000 bpd between Clearbrook and Superior. The Project will minimize environmental impacts by using the same corridor as the Partnership's existing pipelines for most of its path from Berthold to Superior. Enbridge's Neutral Footprint program also ensures that a tree is planted for every tree removed during construction and an acre of land is conserved for every acre of wilderness permanently impacted.

The commercial framework of the Sandpiper Project is consistent with the Partnership's objective of securing low-risk commercial structures that will deliver long-lived earnings and cash flows to its unitholders, and thereafter it will provide significant accretion in distributable cash flow upon completion in early 2016.

"The Sandpiper Project provides much needed pipeline capacity to enable rapidly growing Bakken crude oil production, in conjunction with the Partnership's Lakehead mainline system and the other components of the overall LOMA Program, to access premium markets in Eastern Canada and the U.S. Midwest," said Stephen J. Wuori, president of Enbridge Liquids Pipelines and Major Projects. "We are delighted to welcome Marathon Petroleum as both a committed shipper and a partner. Their shipping commitment demonstrates the economic attractiveness of establishing a low-cost reliable pipeline solution for Bakken producers to access the premium North American markets for light crude oil."

An open season will be undertaken for the Sandpiper Project to provide all shippers with an equal opportunity to enter into capacity commitments on the Project. An appropriate amount of capacity will be reserved for uncommitted shippers at tolls which will be integrated with the North Dakota System. Sandpiper capacity will be expanded if necessary to maintain this reserve.

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