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Enbridge out to satisfy oil sands thirst Planned pipeline would bring 180,000 bpd of diluent from Midwest to Edmonton; 150,000 bpd line from Kitimat already planned Gary Park For Petroleum News
Enbridge is ready to add a second leg to its strategy of delivering condensate to Alberta’s oil sands.
It is seeking shipping commitments for a US$920 million, 180,000 barrel-per-day diluent pipeline from Chicago to Edmonton to help meet a growing hunger for the thinning agent to improve the flow of heavy oil and bitumen through pipelines.
It is already planning a 150,000 bpd line from Kitimat, British Columbia, to Edmonton, hoping to import diluent from the Pacific basin.
With condensate supplies growing scarce in Alberta and oil sands producers such as Imperial Oil and Husky Energy rethinking plans for upgraders in Alberta there is a pressing need for condensate to support pipeline projects from Alberta to U.S. refineries.
Enbridge Chief Executive Officer Pat Daniel said the new Southern Lights proposal “will assist in ensuring adequate supplies of reasonably priced diluent” to support oil sands expansion to 3.5 million bpd by 2015 from 1 million bpd currently.
The pipeline has an in-service date of 2009 provided shippers make formal commitments during an open season that ends June 30.
Enbridge said that although access to diluent is shrinking in Alberta, the commodity is relatively plentiful in the U.S. Midwest and the Pacific basin.
Diluent to be extracted However, the company also expects Southern Lights will recycle diluent extracted from oil sands production shipped to refineries in the Chicago area on its parallel Southern Access pipeline that will add 400,000 bpd to its existing export capacity.
Enbridge said Southern Lights will involve construction of a 16-inch pipe over 674 miles from Chicago to Clearbrook, Minn., changes to its operating crude pipeline network and the reversal of its Line 13 from Clearbrook to Edmonton.
Other elements include a new 20-inch pipeline to carry 185,000 bpd of light sour crude from Cromer, Manitoba, to Clearbrook and an expansion of the existing Line 2 to add another 45,000 bpd of light crude capacity from Edmonton to the Midwest.
Overall, the Southern Lights proposal raises Enbridge’s oil sands-related investments to about C$13 billion over the next five years as Canada’s leading oil shipper strives to protect its dominant role.
Competition from others Other major undertakings on the table include the proposed C$4 billion, 400,000 bpd Gateway pipeline from Edmonton to Kitimat, where 75 percent is tentatively earmarked for shipment to Asian markets and 25 percent for California.
It is also moving ahead with plans for a 400,000 bpd Alberta Clipper line from Superior, Wis., to Chicago, as it duels with rival TransCanada to put a lock on the export market.
Enbridge’s proposed Gateway diluent pipeline faces competition from a partnership of Pembina Pipeline Income Fund and Kinder Morgan which is seeking contractual commitments for a 100,000 bpd diluent system from Kitimat to Edmonton to come on stream in 2008.
The relatively short open season being conducted by Enbridge for Southern Lights is expected to demonstrate which company has the edge in the diluent race and whether there is room for all.
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