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Canadian pipelines chase U.S. markets Calgary-based Enbridge buys Shell assets; Vancouver-based Terasen accelerates timetable for Express Gary Park Petroleum News Calgary correspondent
Enbridge and Terasen, Canada’s two largest crude oil pipeline companies, have ratcheted up the scramble to secure greater access for Canadian oil in U.S. markets.
Operating largely through its U.S. unit, Calgary-based Enbridge announced deals Dec. 22 that include 615 miles of pipelines and 9.5 million barrels of storage in Oklahoma and Illinois, while Vancouver-based Terasen unveiled plans to raise capacity by 60 percent on its 172,000 barrels per day Express line from Alberta to Wyoming.
In the latest of a flurry of U.S. acquisitions, Enbridge will pay Shell-owned companies US$140.5 million for a bundle of assets, subject to regulatory approvals and rights of first refusal.
The purchases are highlighted by the 433-mile Ozark pipeline from Cushing, Okla., to Wood River, Ill., which has capacity of 252,000 bpd, but is currently operating at about two-thirds of that level.
Enbridge believes it can increase Ozark volumes once it completes the purchase a 90 percent stake in the Cushing-to-Chicago crude pipeline from BP, which has capacity of 300,000 bpd plus 4.3 million barrels of tankage.
By the end of 2004, Enbridge expects to have reversed the flow of that pipeline, which will be renamed Spearhead, to open up a new marketing area for Canadian heavy oil.
Among the other assets, Enbridge will gain 58.8 percent of the 135-mile Osage line from Cushing to El Dorado, Kansas, a system that is currently moving 110,000 bpd, 10,000 bpd below capacity; the 47-mile, 65,000 bpd West Tulsa pipeline; and a 60 percent interest in the 310,000 bpd Woodpat line from Wood River to Patoka. Terasen boosting Express capacity Terasen, meanwhile, is accelerating its timetable to boost Express capacity to 280,000 bpd, less than a year after acquiring the line from EnCana for C$1.18 billion.
Initially, it planned a two-stage expansion, but the response to an open season has convinced Terasen to combine the phases when it seeks National Energy Board approval early in 2004, targeting spring 2005 for the upgrade.
The project, which President and Chief Executive Officer John Reid has indicated could cost about C$100 million, is eagerly awaited by refineries in the U.S. Rocky Mountain region, where production is starting to slide.
Express, which covers more than 700 miles, connects at Casper, Wyo., with the Platte system and opens up markets in southern Illinois.
Reid said last month that increasing supply from the Alberta oil sands along with growing U.S. demand are “creating exciting future growth opportunities.”
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