Marathon signs as anchor Sandpiper crude line shipper

Marathon Petroleum Corp. signed with Enbridge Energy Partners LP as an anchor shipper for the Sandpiper Project crude oil pipeline, which will become part of Enbridge's North Dakota System when completed. The companies expect Sandpiper to be operational first-quarter 2016.

Sandpiper will run from Beaver Lodge, ND to Superior, Wis., expanding and extending the Bakken shale takeaway capacity of the North Dakota System by 225,000 b/d to a total of 580,000 b/d.

Enbridge is conducting an open season to solicit commitments from shippers for capacity created by Sandpiper. Sandpiper will include 375 miles of new 24-in. OD line from Beaver Lodge to the current end of the North Dakota system at Clearbrook, Minn., adding 225,000 b/d to the existing 210,000 b/d of capacity. The project also includes a new 375,000 b/d, 233-mile, 30-in. OD line to be built extending the North Dakota System from Clearbrook to connect with Enbridge’s Lakehead Pipeline mainline terminal at Superior, Wis.

Marathon said its participation in Sandpiper, combined with last year’s commitment to Enbridge’s Southern Access line (OGJ Online, Dec. 14, 2012), further its ability to cost-effectively access Bakken production and that its equity ownership in each would help plans to grow its midstream logistics business.

Marathon has also been active in the Utica shale in eastern Ohio, participating in both transportation and processing projects in the region, including condensate splitters at its Canton, Ohio, and Catlettsburg, Ky., refineries and a new pipeline project connecting multiple production sites in eastern Ohio to its Canton refinery and MPLX LP pipelines.

Sandpiper will cost $2.6 billion. Marathon will fund 37.5% of its construction, earning a 27% interest in the North Dakota System when Sandpiper is placed into service based on this commitment and participation in the pipeline’s open season. Marathon will have the option to increase its ownership interest to 30% through additional investments in future system improvements.

Marathon agreed in 2012 to be the anchor shipper on Enbridge’s Southern Access Extension pipeline from Flanagan, Ill. to Patoka, Ill. As a result of that commitment, Marathon has the option to acquire 25% ownership interest in Southern Access. Its subsequent commitment to Sandpiper increases Marathon’s option for ownership interest in Southern Access to 35%.

The Sandpiper open season closes Jan. 24, 2014.

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