Enbridge Plots New U.S. Pipeline

Enbridge Incsaid Tuesday it is plotting a new pipeline to help drain off crude from the massive Cushing, Oklahoma, storage hub, where brimming tanks have at times pressured North American prices. Enbridge, which resumed shipments last week on Line 6B after nine weeks of repairs and cleanup following a devastatingrupture, said the new line could initially move 150,000 barrels a day to the Houston area from Cushing. The line, called Monarch, could be expanded to as much as 350,000 barrels a day, said Steve Wuori, president of the company’s liquids pipelines division. Over supply at Cushing, the world’s largest crude storage hub, and full pipelines for shipping supplies from it, have created disconnects between U.S. benchmark West TexasIntermediate light oil and world oil prices, Wuori said. “We believe there is a need for a southbound drain for that crude,” he told analysts at Enbridge’s investor day in Toronto.”As more Canadian heavy oil predominates in the north, there will be less need to move crudes from Cushing north, and therefore the only place it can really go is south.” He pointed out that Enbridge’s Ozark pipeline system to Wood River, Illinois, from Cushing is always overbooked. The hub needs more of a drain for light oil supplies than a massive new line, he said. Current plans call for a 24-inch pipeline to the refining region on the Gulf of Mexico. Wuori said he believes Monarch would be viable if TransCanada Corp’s $7 billion Keystone XL pipeline toTexas from Alberta proceeds. The U.S. State Department is currently examining that proposal, which has met with opposition from some environmental groups. Canadian crude that is shipped to Cushing on Enbridge’s system and cannot flow on Exxon Mobil’s Pegasus line to the Gulf Coast could make use of Monarch, Wuori said. The company said it is discussing possible timing for such a project with its shippers. The proposal is one of three that it is considering for regions away from its main U.S. Midwest market, where it delivers about 2 million barrels a day. The others include the Northern Gateway project to Canada’s Pacific Coast from Alberta, a huge proposal facing an increasing backlash from some green groups and aboriginal communities. That pipeline would carry oil sands crude to Kitimat, British Columbia, where it would be loaded on tankers bound for Asia. Another plan is the Trailbreaker project, which would involve moving Canadian oil on pipelines to the Atlantic Seaboard, from which Enbridge could supply refineries on the U.S. Atlantic and Gulf Coasts. That idea is currently”dormant,” Wuori said. Meanwhile, the Line 6B rupture, which spilled 19,500barrels of heavy crude into the Kalamazoo River system in Michigan, is still expected to cost $300 million to $400million, excluding any fines, the company said. Another break, on Line 6A near Romeoville, Illinois, in September, will run $40 million to $60 million. After insurance recoveries, those costs are not expected to result in lower distributions from U.S. affiliate EnbridgeEnergy Partners, or a reduction in Enbridge Inc’s earnings, Chief Executive Pat Daniel said. The company expects 2010 earnings to be in the top half of its C$2.50-C$2.70 a share target range, said Daniel, who spent all but a few days in the Marshall, Michigan, area during the Kalamazoo cleanup. He called the experience humbling. ((05 OCT 2010))











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