Enbridge Planning to Construct a New Crude Oil Pipeline to Serve U.S. Market

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Enbridge Incorporated (TSE:ENB/NYSE:ENB) (Calgary, Alberta) is currently in the early conceptual design phase for a new 653-Mile crude oil pipeline, which would connect its Superior, Wisconsin crude oil terminal (Plant 1019724) with the Wood River hub in southern Illinois. Enbridge estimates the new Southern Access Pipeline (PEC 19001242) will require a capital expenditure of between $550 and $650 million dollars to construct. When completed in early 2007, the 24" or 30" diameter pipeline will have an initial transport capacity of 250,000 barrels per day of Canadian crude of oil sands origin. The new line will be owned and operated by Enbridge Energy Partners LP, as a part of the Lakehead pipeline system.

The Southern Access Pipeline is intended to interconnect with Enbridge's recently announced Spearhead Pipeline in the Wood River area. Enbridge plans to reverse the flow of the Spearhead Pipeline between Chicago, Illinois and Cushing, Oklahoma in a $30 million plus project to open new markets for Enbridge in Texas, Okalahoma, Tennessee, and the surrounding areas.

Combined, these two projects are part of a broader strategy by Enbridge to provide greater access to new U.S. markets for growing Canadian crude oil supplies, with the majority of the crude oil supplies being sourced by the vast oil sands resources of Alberta. Depending on the source, the recoverable reserves of crude oil from oil sands in Alberta range from 180 to 300 billion barrels of a total estimated resource of three trillion barrels in place.

The total Lakehead system dates back to 1950 and spans over 3,300 miles with pipeline diameters ranging from 12" to 48". The pipeline has a total capacity of 1.727 million barrels and a daily average of 1.338 million barrels, which is roughly equivalent to 8,000 tanker truckloads. There are 80 existing pump stations at 63 locations and Enbridge also has the capacity to store 10 million barrels at three crude oil terminals.