Enbridge advances Bakken-targeted LOMA program

Enbridge Inc. has received sufficient shipper support to advance its Light Oil Market Access Program. The program will deliver an additional 400,000 b/d of light crude to refiners in Ontario, Quebec, and the US Midwest via:

• Increased pipeline capacity on Enbridge's North Dakota regional system.

• Further expansion of its US mainline system.

• Upgrades to its Canadian mainline terminals.

• An expanded Eastern Access Program.

Production from the Bakken formation centered in North Dakota has risen from 200,000 b/d to 700,000 b/d in the past 5 years, Enbridge said, “with potential to expand to 1.2 million b/d or more in the next 5 years, if transportation access to refinery markets is available.” Enbridge also expects additional growth in light crude production of 100,000 b/d or more from applying the latest recovery technologies to the Cardium and Viking formations in Alberta.

Individual projects within the $6.2-billion program will enter service at varying dates from 2014 to early 2016 pending regulatory approvals, Enbridge said.

Enbridge will expand the Bakken takeaway capacity of its North Dakota System (Sandpiper) by 225,000 b/d to a total of 580,000 b/d, with a target in service date of early 2016. The expansion will involve building a 965-km, 24-in. OD line from Beaver Lodge, ND, to the Superior, Wisc., terminal. The new line will twin Sandpiper’s existing 210,000-b/d North Dakota System mainline, adding 225,000 b/d between Beaver Lodge and its Clearbrook, Minn., and 375,000 b/d between Clearbrook and Superior. Enbridge estimates the cost of this expansion at $2.5 billion.

Enbridge announced earlier this year that it had secured sufficient commercial support to advance additional aspects of its Eastern Access Program, including full reversal of Line 9 to ship Bakken and western Canadian crude to refineries in Ontario and Quebec. A subsequent open season yielded additional commitments requiring an 80,000-b/d capacity increase of capacity in Ontario and Quebec. The Eastern Access Program also includes US mainline system expansions between Griffith, Ind., and the US-Canada border near Sarnia, Ont. Enbridge estimates total Eastern Access Program cost at $3.2 billion including the $200 million Toledo Pipeline expansion.

Enbridge will build its 265-km, 24-in. OD Southern Access Extension Pipeline from Flanagan to Patoka, Ill., at an estimated cost of $800 million with a target in service date of first-quarter 2015. Initial capacity on the line will be 300,000 b/d. Marathon Petroleum Co. LP has contracted capacity on the line to supply its PADD II refineries.

The terms of the Marathon contract provide sufficient commercial support to the project, but Engridge will hold an open season to provide other potential shippers with an opportunity to secure capacity. Enbridge could increase its capacity if demand warrants through additional horsepower or increasing OD to 30-in. Marathon will have an option to take up to a 25% interest in the pipeline.

Increased availability of western light oil supplies, and attractive pricing relative to US Gulf Coast-sourced supply, has prompted Chicago-area refineries to shift to western Canada and North Dakota as their primary light oil supply source, Enbridge said in detailing expansion plans for its US mainline Lakehead System between Flanagan, Ill., and Griffith, Ind. Enbridge will build a 122-km, up to 36-in. OD twin of the existing Line 62, with initial capacity of 570,000 b/d. The company estimates cost of this expansion at $500 million, with a target in-service date of mid-2015. Over the same timeframe Enbridge will also expand capacity of its 42-in. OD Line 61 from Superior to Flanagan to its full 1.2-mil b/d at a cost of $1.3 billion.

Enbridge plans to expand its Canadian mainline terminals to accommodate the additional light oil volumes and enhance flexibility.

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

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