CALGARY, Alberta (Dow Jones)
Enbridge Inc. (ENB, ENB.T) said Wednesday it's moving ahead with C$3.2 billion (US$3.2 billion) in pipeline expansions, mostly to send more crude oil from Canada and North Dakota to the Midwest and eastern Canada.
The expansions include a full reversal of the Line 9 pipeline from Sarnia, Ontario to Montreal, where crude oil produced in North America will replace imports.
The expansions are another step in the reshaping of North America's energy infrastructure to accommodate rising crude oil production in Canada and the western U.S. Pipeline companies are building or expanding pipelines south, west and east from the center of the continent to the coasts. The cheaper North American production is starting to displace foreign oil imports, which are more expensive than U.S. benchmark prices.
"Refineries in Ontario and Quebec are paying premiums of $20 per barrel or more to obtain crude oil from the foreign sources they are currently largely dependent on," the head of Enbridge's liquids pipelines business, Stephen Wuori, said in a release. "Access to Canadian and U.S. Bakken production will help level the playing field for these refineries, protecting their long term viability and safeguarding jobs."
The Calgary pipeline company said C$2.6 billion of the expansions will go to expanding the eastward capacity of the Mainline, the largest pipeline system transporting Canadian crude oil to the U.S. The capacity of Spearhead North pipeline between Flanagan, Ill., and Griffith, Ind. will increase by 105,000 barrels a day and the capacity of the Line 6B pipeline between Indiana and Michigan will expand by 260,000 barrels a day.
Enbridge also said it will spend C$400 million to expand the Southern Access pipeline between Superior, Wis. and Flanagan, Ill., from 400,000 barrels a day to 560,000 barrels a day. And C$200 million to expand the Alberta Clipper pipeline between Hardisty, Alberta and Superior, Wis., which will increase by 120,000 barrels a day to 570,000 barrels a day.
The expansions are expected to be completed in 2014.
The reversal of the Line 9 pipeline to Montreal will require approval from the National Energy Board, Canada's energy regulator, which is currently reviewing the first phase of the reversal from Sarnia to Westover, Ontario.
Copyright (c) 2012 Dow Jones & Company, Inc.