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.

Enterprise, Enbridge and Anadarko to develop Texas Express Pipeline

HOUSTON & THE WOODLANDS, Texas - Enterprise Products Partners L.P., Enbridge Energy Partners, L.P. and Anadarko Petroleum Corp. on March 6 announced that shippers have executed long-term contracts for capacity on the Texas Express Pipeline (TEP) being developed by the joint venture.

The shippers, which include unaffiliated shippers, have tendered 15-year, ship-or-pay transportation agreements containing volume commitments that total 232,000 barrels per day (b/d). The contracts also include an option provision allowing shippers to increase their volume commitment.

Originating near Skellytown in Carson County, Texas, the 20-inch diameter TEP mainline will extend approximately 580 miles to Enterprise's natural gas liquids (NGL) fractionation and storage complex at Mont Belvieu, Texas, and will provide access to other third-party facilities in the area.

The pipeline will provide much-needed takeaway capacity for producers in West Texas, the Rocky Mountains, southern Oklahoma and the Mid-continent area, giving them access to the largest NGL market along the Gulf Coast and the opportunity to maximize the value of their NGLs. Production from the Rockies, Permian Basin and Mid-continent will be delivered into TEP through Enterprise's existing Mid-America Pipeline System (MAPL) which extends north through Oklahoma into Conway, Kansas, and south into the Permian Basin.

"This joint venture with Enbridge and Anadarko brings together partners with unique and complementary strengths to provide an industry solution that addresses the need for flow assurance and market choices for producers, as well as reliable supplies of price-advantaged, natural gas-derived feedstocks to meet the increasing demand of petrochemical operators," said Michael A. Creel, president and chief executive officer of Enterprise's general partner. "For Enterprise, this project is a 'bolt-on' expansion that enhances the value of our integrated midstream network of assets, including the pipelines that will feed TEP, as well as our fractionators, storage facilities and distribution network at Mont Belvieu, which will be fed by the new pipeline."

The joint venture also includes two new NGL gathering systems. The first will connect TEP to natural gas processing plants in the Anadarko/Granite Wash production area located in the Texas Panhandle and Western Oklahoma. The second NGL gathering system will connect the new pipeline to Barnett Shale natural gas processing plants located in Central Texas. Wider access to multiple production areas, in addition to a competitive transportation fee structure, makes this an attractive option for producers and natural gas processors. Enterprise will construct and operate the pipeline, while Enbridge will construct and operate the new gathering systems.

Enterprise extends open season for capacity on ATEX Express pipeline

HOUSTON, Texas - Enterprise Products Partners L.P. (NYSE: EPD) announced on Jan. 10 that it is conducting a two-week supplemental open commitment period to accommodate additional shipper demand on the partnership's Appalachia to Texas pipeline ("ATEX Express").

Earlier in January, Enterprise said that it had received sufficient long-term transportation commitments to move forward with development of the 1,230-mile ATEX Express pipeline, which will deliver growing ethane production from the Marcellus/Utica Shale areas of Pennsylvania, West Virginia and Ohio to the U.S. Gulf Coast.

"Since our announcement to proceed with development of the ATEX Express pipeline, we have received multiple inquires from producers seeking transportation capacity," said A.J. "Jim" Teague, executive vice president and chief operating officer of Enterprise's general partner. "We will use this extended open commitment period to execute additional binding, 15-year transportation agreements." 

The open commitment period ends Jan. 23.

Enterprise, Genesis Energy to build crude oil system in deepwater Gulf of Mexico

HOUSTON, Texas - Enterprise Products Partners L.P. (NYSE: EPD) and Genesis Energy, L.P. (NYSE: GEL) on Jan. 4 announced that they have executed crude oil transportation agreements with a consortium of six Gulf of Mexico producers which will provide the necessary support for construction of a new crude oil gathering pipeline serving the Lucius development area in southern Keathley Canyon.

The producer group is comprised of Anadarko U.S. Offshore Corp., Apache Deepwater Development LLC, Exxon Mobil Corp., Eni Petroleum US LLC, Petrobras America Inc. and Plains Offshore Operations Inc.

The pipeline will be constructed and owned by Southeast Keathley Canyon Pipeline Co. LLC (SEKCO), a 50/50 joint venture between Enterprise and Genesis. Enterprise will serve as construction manager and operator of the new pipeline, earning fees for both services.

The 149-mile, 18-inch SEKCO Oil Pipeline is being designed with a capacity of 115,000 barrels per day b/d) and would connect the Lucius-truss spar floating production platform to an existing junction platform at South Marsh Island 205 that is part of the Enterprise-operated Poseidon pipeline system.

The SEKCO Oil Pipeline is expected to begin service by mid-2014. Located in approximately 7,100 feet of water, the third-party owned Lucius-truss spar floating production platform has the capability to produce in excess of 80,000 b/d of crude oil and 450 million cubic feet per day of natural gas. The Lucius production area is estimated to have more than 300 million barrels of oil equivalent, with relatively shallow and highly productive reservoirs, primarily comprised of crude oil.

"We are very pleased to work with our partner and customers to develop this project, which will allow for the continued safe and reliable delivery of vital domestic crude oil supplies to Gulf Coast refineries," said Michael A. Creel, president and CEO of Enterprise's general partner.

"Additionally, we expect the SEKCO Oil Pipeline to provide capacity for additional projects in the deepwater Gulf of Mexico that will feed Enterprise's downstream crude oil pipeline value chain."

Enterprise to sell part of Energy Transfer stake for $825.1 million

Enterprise Products Partners L.P. (NYSE: EPD), the largest shareholder of Energy Transfer Equity L.P. (NYSE: ETE), agreed to sell about three-fourths of its stake in the company to unnamed purchasers, saying it will use the $825.1 million in proceeds for general partnership purposes, including funding growth capital projects.

ETE is the general partner of Energy Transfer Partners L.P. (NYSE: ETP), which runs a natural-gas pipeline business.

EPD, a pipeline company, said it plans to sell 22.8 million Energy Transfer units. The deal values Energy's units at about $36.18, or a 9.1 percent discount from the Dec. 23 closing price of $39.80.

EPD would still hold about 6.5 million shares of ETE's units after the sale, which is slated to close in January.