Enbridge to Sell Saskatchewan Pipeline System

Researched by Industrial Info Resources (Sugar Land, Texas)--Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta) has announced that it will sell a Saskatchewan and Manitoba crude oil pipeline system to private midstream company Tundra Energy Marketing Limited (Calgary) for C$1.075 billion (US$819.4 million). The sale is part of Enbridge's previous announcement in early September that it would sell C$2 billion in non-core assets to free up capital before the company's C$37 billion (US$28 billion) acquisition of Spectra Energy Corporation (NYSE:SE) (Houston, Texas). Industrial Info is tracking $17.3 billion in Enbridge projects and $14.8 billion in Spectra projects.

According to Tundra Energy, the South East Saskatchewan Pipeline System transports approximately 175,000 barrels per day (BBL/d) of crude to Enbridge's mainline system in Cromer, Manitoba, where an interconnection with Enbridge's Bakken Expansion Pipeline is located. The deal includes more than 1,600 kilometers of crude oil and liquids-gathering pipeline, approximately 547 kilometers of trunk line and four truck terminals. The sale is expected to be completed by the end of the fourth quarter this year, before Enbridge's closure on Spectra, which is expected in early 2017.

Proceeds from the sale will go to fund growth projects, including the Wood Buffalo pipeline extension. This grassroot, 65-mile crude oil pipeline extension will help transport up to 800,000 BBL/d oil from Alberta's oil sands from Enbridge's Cheecham Terminal, near Fort McMurray, Alberta, to the company's Kirby Lake Terminal, also near Fort McMurray. Industrial Info is tracking $330 million of projects related to the Wood Buffalo extension.

One of the largest potential Enbridge projects is the $6 billion+ Northern Gateway crude oil pipeline, a 731-mile proposed pipeline that would run from Alberta to an export terminal in Kitimat, British Columbia. The Canadian government is in the process of deciding whether to allow this project to proceed, and last week set itself the date of November 25 as the deadline to accept or reject the proposed project. The project was approved by the previous Canadian government, but had its permits invalidated earlier this year in a court ruling that found the government did not properly consult with indigenous people regarding the project.

Spanning both the U.S. and Canada, one of the biggest projects under the auspices of Enbridge is the Line 3 replacement program, which will fully replace 1,031 miles of crude oil pipeline from Hardistry, Alberta, to Superior, Wisconsin. The project has a total investment value of $7.5 billion and involves replacing the existing pipe with modern pipe materials.

Among the projects Enbridge will inherit in the Spectra Energy deal is the $1.5 billion Nueces-to-Brownsville grassroot natural gas pipeline in Texas. The 168-mile pipeline will transport up to 2.6 billion cubic feet per day of natural gas, originating at the header of the Agua Dulce hub in Nueces County to interconnect with the Sur de Pas-Tuxan Pipeline, which will extend into Mexico. The project is planned to kick off next summer and take about 15 months to complete.

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