Enbridge Energy Partners to Invest $3.4B in Light Oil Market Access Program
Enbridge Energy Partners (NYSE: EEP) announced today its plans to invest in a Light Oil Market Access Program (the "Program") to expand access to markets for growing volumes of North Dakota and western Canada light oil production. The overall Program includes a number of individual projects, some of which will be jointly funded by the Partnership and Enbridge Inc. (Enbridge) (NYSE: ENB) (TSX:ENB), and certain projects that will be funded entirely by the Partnership.
Enbridge Partners' investment in the Program is expected to be approximately $3.4 billion. The joint funding arrangements between the Partnership and Enbridge provide Enbridge Partners with options to increase or decrease its investment in certain projects to match its funding capability. The Partnership's investments will be undertaken on a fixed return cost-of-service basis under which it will not be exposed to throughput risk or capital cost risk. Broad shipper support has been demonstrated for the Program and the associated rate principles. The projects that comprise the Program are subject to respective customary regulatory approvals.
The Light Oil Market Access Program responds to significant recent developments with respect to supply of light oil from U.S. north central formations and western Canada, as well as refinery demand for light oil in the U.S. Midwest and eastern Canada. On the supply side, production from the Bakken formation centered in North Dakota has grown from 200,000 barrels per day (bpd) to 700,000 bpd in the last five years with potential to expand to 1,200,000 bpd or more in the next five years, if transportation access to refinery markets is available. Additional growth in light crude production of 100,000 bpd or more is anticipated from application of latest recovery technologies to the Cardium and Viking formations in Alberta, Canada. Supply from these areas has become increasingly attractive to refineries in the U.S. Midwest and eastern Canada compared to much more costly alternative sources.
The individual projects to be undertaken by the Partnership pursuant to the Light Oil Market Access Program are summarized as follows:
Light Oil Market Access Projects ------------------------------------------ In Service Project Estimated Cost Target Funding 1. Sandpiper Project $2.5 billion early 2016 EEP
2. Eastern Access Upsize
Line 6B expansion Joint $0.4 billion early 2016 (ENB/EEP)
3. U.S. Mainline System
Chicago Area Connectivity (Line Joint 62 Twin Flanagan to Griffith) $0.5 billion mid-2015 (ENB/EEP) Superior to Flanagan (Line 61 Joint capacity expansion) $1.3 billion mid-2015 (ENB/EEP)
North Dakota System Expansion/Extension (Sandpiper Project)
The Program includes the Sandpiper Project which will expand and extend the Partnership's North Dakota feeder system. The Bakken takeaway capacity of the Partnership's North Dakota System will be expanded by 225,000 bpd to a total of 580,000 bpd, with a target in service date of early 2016. The expansion will involve construction of an approximately 600-mile 24-inch diameter line from Beaver Lodge, North Dakota, to the Superior, Wisconsin, mainline system terminal. The new line will twin the 210,000 bpd North Dakota System mainline, which now terminates at Clearbrook Terminal in Minnesota, adding 225,000 bpd of capacity on the twin line between Beaver Lodge and Clearbrook, and 375,000 bpd of capacity between Clearbrook and Superior.
The estimated capital cost of this project is approximately $2.5 billion. The capital cost will be rolled into the existing North Dakota System rate base, with the associated cost of service to be recovered in tolls. The Sandpiper Project commercial terms remain subject to approval by the Federal Energy Regulatory Commission (FERC), as filed in the Petition for Declaratory Order filed with FERC on November 2, 2012. The commercial terms filed with FERC have support from numerous shippers and stakeholders on the North Dakota System. EEP will fully fund the Sandpiper Project.
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