Condensate needs could spur larger pipeline

Strong interest from potential customers is prodding Enbridge to consider a substantial expansion of a condensate pipeline that is part of its planned 720-mile dual-pipeline Gateway project.

The company said the first phase of an open season to test market response to the 150,000 barrel per day system from the British Columbia coast to Edmonton indicated a desire for up to 265,000 bpd.

Enbridge Vice President Richard Bird said the open season confirmed the high level of interest in diversifying condensate supplies for oil sands producers.

He said that ensuring “adequate, competitively priced access to diluent is an important ingredient in maximizing the production from Alberta’s oil sands.”

The price of domestic condensate has climbed in recent months, with Shell Canada reporting a 35 percent hike to C$63.67 per barrel in the first half of 2005. Posted prices for condensate at Edmonton have since broken through the C$80 barrier.

The condensate is needed to facilitate the movement of oil sands crude by pipeline.

Enbridge has set a Sept. 30 deadline for the second phase of the open season, when prospective shippers will be asked to execute a precedent agreement that will become binding when accepted and executed by Enbridge.

If those contracts exceed the original target of 150,000 bpd, Enbridge is open to building a larger line.

The proposed 400,000 bpd Gateway pipeline from the oil sands to deepwater British Columbia ports for shipment to Asia and California and the condensate line, although separate ventures, could cost C$3.6 billion if built simultaneously, C$600 million less than two standalone projects.

—Gary Park