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ConocoPhillips sells Seaway line stake; Enbridge-EPP line to reverse

ConocoPhillips has entered into agreements to sell its interests in two US pipeline companies for $2 billion. In its first sale, ConocoPhillips will divest its interest in Seaway Crude Pipeline Co. to Enbridge Holdings (Seaway) LLC, a subsidiary of Enbridge (US) Inc., which will reverse its flow to bring crude form Cushing, Okla., to the US Gulf Coast.

Enbridge Inc. and Enterprise Products Partners LP (EPP) agreed to reverse the direction of oil flows on Seaway with an initial capacity of 150,000 b/d in second-quarter 2012. Following pump station additions and modifications, anticipated to be completed by early 2013, the capacity of the reversed Seaway Pipeline will reach 400,000 b/d.

The companies expect the reversed Seaway to be fully contracted and will conduct an open season to validate shipper support for an expansion of Seaway, through looping or twinning.

The 670-mile Seaway system includes the 500-mile, 30-in. OD Freeport, Tex., to Cushing, Okla., long-haul system, and the Texas City Terminal and Distribution System, serving refineries in the Houston and Texas City areas. SCPC also includes 6.8 million bbl of crude oil tankage on the Texas Gulf Coast and four import docks at two sites.

Enbridge and EPP also plan to build a 45-mile pipeline linking Seaway directly to EPP’s ECHO crude oil storage terminal southeast of Houston. The joint-venture partners estimate costs to reverse the line and construct supporting lateral and related facilities at roughly $300 million.

Enbridge bought ConocoPhillips’s 50% interest in Seaway for $1.15 billion. EPP will continue to operate the pipeline system and storage facilities. Enbridge and ConocoPhillips expect the transaction to close in December or early 2012, subject to customary approvals.

Separately, ConocoPhillips also will sell a 16.55% interest in Colonial Pipeline Co. and Colonial Ventures LLC to Caisse de depot et placement du Quebec. ConocoPhillips expects the transaction to close first-quarter 2012 following approval by shareholders in Colonial. ConocoPhillips described the sales as part of an ongoing effort to divest noncore assets.

ConocoPhillips sold the Seaway Products Pipeline Co. to DCP Midstream in June. DCP will convert the line to NGL service (OGJ Online, June 13, 2011).

Contact Christopher E. Smith at chriss@ogjonline.com.


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