Enbridge to spend $3.8 billion on pipeline to take oil sands crude to U.S. Gulf

HOUSTON & CALGARY, Alta. - Enbridge Inc. and Enterprise Products Partners L.P. on March 26 announced that they have secured capacity commitments from shippers to proceed with an expansion of the Seaway Pipeline that will more than double its capacity to 850,000 b/d by mid-2014.

During the supplemental binding open commitment period, Enterprise and Enbridge received additional commitments with terms ranging from five to 20 years that support construction of a 512-mile, 30-inch diameter twin (a parallel line) along the route of the Seaway Pipeline, adding 450,000 barrels per day (b/d) of capacity to the existing system. This capacity can be cost-effectively expanded on a timely basis with the addition of incremental pump stations.

The additional commitments obtained for the Seaway Pipeline System include five and 10-year commitments for volumes originating at Cushing, Okla., and 10, 15 and 20-year commitments for volumes originating at Flanagan, Ill., and transiting to the Seaway System via Enbridge’s Flanagan South Pipeline.

Substantially all of the initial capacity of the Seaway System has been contracted for these terms.

Enterprise and Enbridge are nearing completion of the first phase of the reversal of the Seaway Pipeline, which will provide 150,000 b/d of southbound takeaway capacity from Cushing to the Gulf Coast by June 1, 2012. Following pump station additions and modifications, which are expected to be completed by the first quarter 2013, capacity would increase to 400,000 b/d, assuming a mix of light and heavy grades of crude oil.

"Based on the tremendous response to the open commitment period, shippers have recognized the advantages Seaway offers in being able to provide a timely, economic and complete solution for relieving not only the bottleneck at Cushing but facilitating the development and delivery of North American energy reserves," said Michael A. Creel, president and chief executive officer of Enterprise's general partner. "In addition to promoting energy independence, the Seaway expansion will also offer economic benefits, including job opportunities during construction and at North American mills that we expect will provide the pipe for the project."

"Expansion of the Seaway Pipeline, along with Enbridge's Flanagan South Project, will provide crude oil producers in the Bakken region and other emerging crude oil sources capacity to move secure, reliable supply to U.S. Gulf Coast refineries, offsetting supplies of imported crude,” said Pat Daniel, CEO, Enbridge Inc. "By leveraging existing infrastructure wherever possible, impacts to landowners, communities and the environment will be minimized."

The Seaway partners previously announced construction of a new 85-mile 30-inch diameter pipeline that will be built from Enterprise's ECHO crude oil terminal southeast of Houston to the Port Arthur/Beaumont, Texas refining center, which will give shippers access to heavy oil refineries on the Gulf Coast. Service on the pipeline to Port Arthur/Beaumont is expected to begin in early 2014. A separate open season for the ECHO to Port Arthur leg is under way and due to end April 13, 2012. This open season is offering interested shippers 200,000 b/d of incremental capacity over and above the volumes already subscribed to as part of the Seaway reversal project.