OTTAWA (Dow Jones)
Enbridge Inc.'s (ENB) proposed pipeline linking Alberta's oil sands to the U.S. Gulf Coast could still start up in 2012, a senior executive said Wednesday, after signaling a two-year delay last week.
The $2.6 billion Texas Access pipeline, a joint venture with Exxon Mobil Corp. (XOM), could stick to its original schedule despite not drumming up sufficient support from oil sands producers in a recent open season, said Steve Wuori, who heads Enbridge's liquids pipelines unit.
A delay to 2014 "need not be the case," Wuori said in an interview. "It really depends on the response from the industry ... clearly if the industry commitments are there, we can be in place by 2012."
Last week, Enbridge Vice President Al Monaco told reporters in Calgary that the 400,000-barrel-a-day pipeline would likely be delayed after oil sands production forecasts were scaled back in the face of rising costs and regulatory delays. In the interim, the company will reverse two existing pipelines to the Eastern seaboard and ship oil sands crude to the U.S. Gulf under the C$350 million Trailbreaker plan.
Earlier Wednesday, Calgary-based rival TransCanada Corp. (TRP) announced it was pushing ahead with its own Alberta-Gulf Coast line, a 500,000-barrel-a-day expansion of the Keystone pipeline that is currently under construction. It has already firmed up long-term contracts for 60% of this capacity, and is seeking further commitments.
Keystone is a joint venture with ConocoPhillips (COP).
"Clearly their announcement is of great interest to us and we'll be discussing the implications of that with our shippers," Wuori said.
Enbridge would need shipping commitments by the end of the year if Texas Access is to come into service in 2012, he added. This is still viable and oil sands producers are still interested in the pipeline, Wuori said, despite TransCanada's greater success in attracting firm agreements.
One advantage will be the lower capital cost versus Keystone's $7 billion, he said, as Texas Access will connect to Enbridge's existing system at Patoka, Ill., before heading down to Texas.
Meanwhile, Trailbreaker will provide a "two for one" option, allowing oil sands producers to access the Gulf Coast market within two years, and then the Philadelphia market once Texas Access is up and running.
Enbridge plans to reverse crude flows on Line 9 between Sarnia, Ontario, and Montreal, and on its Montreal-Portland pipeline. With the heavy oil sands-derived crude diverted down to Texas, these lines could take lighter synthetic crude oils to refineries in the Philadelphia area, which depend predominantly on light West African crudes.
Canadian synthetic crude "could easily offset that, and producers would gain access to two new markets," Wuori said.
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