Enbridge proposed a C$6.2 billion ($6.3 billion) expansion of its oil pipeline system, aimed at moving surging volumes of light crude from Western Canada and the North Dakota Bakken to refineries in the eastern part of the continent and US Midwest.
The series of projects, which would add a total of 400,000 barrels per day of overall capacity to the huge Canada-to-United States network, is larger than Enbridge had proposed previously as it sought to address the need for new transport capacity.
“This is a collection of projects which together will serve to connect growing light oil supplies from the Bakken play in North Dakota and from Western Canada to premium refinery markets in the US Midwest and Eastern Canada,” Al Monaco, the company’s chief executive, said on a conference call.
Booming production of oil sands-derived crude from Alberta and shale oil in Western Canada and the northern United States – and limited capacity to move the supplies to market – are behind the complex series of projects across the system, which currently moves more than two million barrels a day.
Canada is the largest source of crude oil imports to the United States, shipping more than 2 million barrels per day to refineries primarily in the Midwest. The International Energy Agency said last month that output from Alberta’s oil sands alone is expected to nearly triple to 4.3 million bpd by 2035.
The company’s US affiliate, Enbridge Energy Partners, will foot slightly more than half of the total bill for the expansion plan, or $3.4 billion. In October, the company said its “light oil market access programme”, which includes projects in Canada, North Dakota, the US Midwest, and between Sarnia, Ontario and Montreal, would cost C$5.5 billion. But Enbridge added a 265 km (165-mile) pipeline between Flanagan and Patoka, in Illinois, at a cost of C$800 million, the company said.
“We’ve been developing this concept for a while and we’re pleased today to have firm commercial underpinning through a long-term capacity agreement with an anchor shipper and that’s going to allow us to proceed with the project,” Monaco said. “Accessing the Patoka hub is critical for our shippers because Patoka provides a launching point to move light crude to (western Pennsylvania and Ohio) where there’s significant light oil refining capability.”
Some of the initial capacity has already been contracted by Marathon Petroleum Corp (MPC), which would take the light crude for its Midwest refineries.
The various expansions will be put into place between 2014 and 2016, the company said. The new and expanded lines are part of Enbridge’s C$26 billion expansion plan, which includes the controversial C$6 billion Northern Gateway line, which would take oil sands crude to an export port on British Columbia’s northern Pacific coast.
