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.

U.S. delays decision on Keystone XL until after 2012 election

WASHINGTON, D.C. - The Obama administration, under pressure from officials in Nebraska and environmental activists, announced on Nov. 10 that it would review the route of TransCanada's proposed Keystone XL oil pipeline, effectively delaying any decision about its fate until after the 2012 election.

The State Department said in a statement that it was ordering a review of alternate routes to avoid the environmentally sensitive Sand Hills region of Nebraska, which would have been put at risk by a rupture of the 1,700-mile pipeline carrying dilbit extracted from oil sands formations in Alberta to refineries in Oklahoma and the Gulf Coast.

The move is the latest in a series of administration decisions pushing back environmental matters beyond next November's presidential election to try to avoid the heat from opposing interests - business lobbies or environmental and health advocates - and to find a political middle ground.

The proposed project by TransCanada put the president in a political squeeze between the demand for a secure source of oil and the thousands of jobs the project will bring, and the loud agitation of environmental advocates who threatened to withhold electoral support next year if he approved it.tar sands

Enbridge announces $1.2 billion looping of Athabasca Pipeline

CALGARY, Alta. - Enbridge Inc. announced on Sept. 12 that it will loop the southern section of its Athabasca Pipeline from Kirby Lake, Alta., to the Hardisty, Alta., crude oil hub at an estimated cost of approximately $1.2 billion.

The looped line will initially add approximately 450,000 barrels per day (b/d) of capacity between these points, with low-cost expansion potential to 800,000 b/d.

The line is expected to be capable of accepting initial volumes by early 2015, with its full initial capacity available by 2016.

The new line will include approximately 210 miles of 36-inch pipeline largely within the existing Athabasca Pipeline right-of-way.

The new line is designed to accommodate the need for additional capacity to serve Kirby area oilsands growth, beyond the expansion of the existing 30-inch pipeline to its maximum capacity of 570,000 b/d which was announced in the fall of 2010.

Transferring existing Kirby area volumes to the new 36-inch line from the existing 30-inch line will also free up the latter to accommodate additional long-haul volumes originating from the Cheecham or Athabasca terminals further upstream on the Athabasca System.

"Twinning our Athabasca system south of Kirby represents a highly efficient solution to the needs we are seeing for additional long-haul and short-haul capacity into Hardisty, leveraging off the advantages of our existing asset base and right-of-way," said Stephen J. Wuori, president, Liquids Pipelines.

"Based on our recent construction experience, we expect to create about 545 person years of employment in building the twinning project," said Wuori. "As we move through construction, those crews will be purchasing goods and services, as well as housing and food from local retailers. Once in operation, the pipeline will generate significant tax revenues for communities along the right-of-way."

State Department firms up timetable for Keystone XL Pipeline decision

WASHINGTON, D.C. - The State Department is pointing to November as the time frame for a final decision on the proposed Keystone XL Pipeline.

In a July 22 conference call, department spokesman Daniel Clune said a final environmental impact statement is likely to be issued in August on the $7 billion project.

Clune said that State Department officials would come to Lincoln, Neb., and to the Nebraska Sandhills in September to give residents two more chances to weigh in on the controversial project. Similar meetings are planned for state capitals in the five other states the pipeline would cross on its way from the oil sands of Alberta to refineries along the U.S. Gulf Coast.

While the agency is standing by its commitment to act by the end of the year, "we won't make a decision until we complete a thorough review process," Clune said.

Secretary of State Hillary Clinton or her designee will answer the pivotal question of whether the project is in the national interest.

That determination "will take into account the environmental and safety issues covered in the final environmental impact statement," Clune said, "as well as additional issues related to the national interest, such as energy security and economic considerations."

Enbridge's Wuori argues that Northern Gateway needed to diversify markets

CALGARY, Alta. - Steve Wuori, in the keynote speech on May 18 at Calgary Economic Development’s 2011 Report to the Community, said Canada has one market, one customer, which is the United States.

The reliance on the United States as its main market is facing challenges, added Wuori. United States demand peaked between 2005 and 2007 and has been declining since. There is also rising domestic production in the United States. Also there is a drive to convert the American heavy truck fleet to natural gas. Other challenges include a growing opposition to the oilsands and a growing production of ethanol south of the border.

Enbridge has proposed its Northern Gateway project between Edmonton and Kitimat - a $5.5 billion, two parallel pipeline project of 1,900 kilometers - which would diversify the market to include Asia and the Pacific Rim markets.

Wuori said the project would be a "game-changer" for Canada because of the unlocking of various new markets - leading to a $2-3 per barrel increase in the price paid for its oiloil, a $270-billion increase in national GDP over 30 years, 63,000 person years of employment during construction, $4.3 billion in labor-related costs and income for people, and about 1,150 long-term jobs once Northern Gateway is in operation.