Enterprise and Enbridge to proceed with Seaway and Flanagan South oil pipeline extensions; enhanced capacity for Canadian and Bakken crude to Gulf Coast
27 March 2012
|
|
| The new extensions will provide enhanced capacity to carry Canadian and Bakken crude to the US Gulf Coast. Source: Enbridge. Click to enlarge. |
Enbridge Inc. and Enterprise Products Partners L.P. have secured capacity commitments from shippers to proceed with construction of a 512-mile, 30-inch diameter twin (a parallel line) along the route of the Seaway Pipeline, adding 450,000 bpd of capacity to the existing system (for a total 850,000 bpd). (Earlier post.) The expansion of the reversed Seaway Pipeline will more than double its capacity to 850,000 barrels per day (bpd) by mid-2014 and transport oil originating in the Canadian oil sands and the US Bakken shale from Cushing, Oklahoma to the US Gulf Coast at Houston, with an extension to Port Arthur/Beaumont.
Enbridge also announced plans to proceed with an expansion of its Flanagan South Project. The Flanagan South Pipeline from Flanagan, Illinois to Cushing, Oklahoma will be upsized to a 36-inch diameter line with an initial capacity of 585,000 barrels per day (bpd). The Flanagan South Pipeline will be constructed along the route of Enbridge’s existing Spearhead Pipeline between the Flanagan Terminal, southeast of Chicago, to Enbridge’s Cushing Terminal in Oklahoma. Flanagan connects to the Enbridge pipeline system reaching up to Edmonton, Canada.
The total estimated cost of the Flanagan South Pipeline project, as a result of the larger capacity and pipeline size, has increased from the original $1.9 billion to $2.8 billion. In addition, the Enbridge share of the cost of the Seaway Pipeline twin line and extension is expected to be approximately $1.0 billion.
Enbridge’s Gulf Coast Access projects give Bakken and western Canadian producers timely, economical and reliable options to deliver a variety of crudes to refinery hubs throughout the heart of North America and now as far as the Gulf Coast. The upsized new Flanagan South Pipeline, combined with our existing Spearhead Pipeline System, will offer shippers 775,000 bpd of capacity from Flanagan to Cushing, with the Seaway Pipeline System reversal and expansion offering capacity of 850,000 bpd from Cushing to the Gulf Coast. The commitments secured in these open seasons will support additional infrastructure to meet the growing transportation needs of these producers and the US Gulf Coast refiners.
—Patrick D. Daniel, CEO, Enbridge Inc.
|
|
| Enbridge mainline system. Source: Enbridge. Click to enlarge. |
TransCanada’s proposed Gulf Coast Project—the Cushing-to-Gulf portion of the original Keystone XL project (earlier post)—as originally scoped would provide up to 830,000 bpd capacity from Cushing to the Gulf.
The additional commitments obtained for the Seaway Pipeline System include five and 10-year commitments for volumes originating at Cushing, Oklahoma and 10, 15 and 20-year commitments for volumes originating at Flanagan, Illinois and transiting to the Seaway System via Enbridge’s Flanagan South Pipeline.
Substantially all of the initial capacity of the Seaway System has been contracted for these terms. Enterprise and Enbridge are nearing completion of the first phase of the reversal of the Seaway Pipeline, which will provide 150,000 bpd of southbound takeaway capacity from Cushing to the Gulf Coast by 1 June 2012. Following pump station additions and modifications, which are expected to be completed by the first quarter 2013, capacity would increase to 400,000 bpd, assuming a mix of light and heavy grades of crude oil.
The Seaway partners previously announced construction of a new 85-mile 30-inch diameter pipeline that will be built from Enterprise’s ECHO crude oil terminal southeast of Houston to the Port Arthur/Beaumont, Texas refining center, which will give shippers access to heavy oil refineries on the Gulf Coast. Service on the pipeline to Port Arthur/Beaumont is expected to begin in early 2014. A separate open season for the ECHO to Port Arthur leg is underway and due to end 13 April 2012. This open season is offering interested shippers 200,000 bpd of incremental capacity over and above the volumes already subscribed to as part of the Seaway reversal project.
This could be a good compromise for USA's short term internal market. It would also leave enough Canadian crude for the Asian market via the near future large diameter Trans-Mountain Pipeline.
Posted by: HarveyD | 27 March 2012 at 01:30 PM
Why could there not be a refinery built along the Mississippi in central U.S. instead of piping all the way to the New Orleans area. It would not have to be the size of the Louisana sites.
Posted by: Jimr | 27 March 2012 at 03:25 PM
What compromise? - these are part of the shift to oil from bituminous sands, to high MPG ICEs and HEVs.
While the gov pours OUR money into the EV arena (which is dismayingly similar to what it was 12 years ago), private industry brings us oil from sands (which was science fiction 12 years ago) using their money.
-
There CAN be a refinery built along the Mississippi in central U.S.
No one else thinks it's a good idea.
Go build one.
You'll be rich.
Posted by: ToppaTom | 28 March 2012 at 02:35 AM
If this is an end run on Keystone, hasn't:
The path been filled with prior leaks?
Aren't oil tars so pollution laden that they have NEVER been previously considered oil or accounted as oil reserves?
If these tars reach the Gulf, the refined product will mostly be shipped to the rest of the world, like Europe where gasoline/diesel is ~$10/gallon?
Aren't huge oil firm profits, not US energy independence, the main Keystone purpose?
If the above is incorrect, can one explain in detail?
Posted by: kelly | 28 March 2012 at 04:55 AM
Yes Kelly, USA could become a NET high price gasoline-diesel exporter with 2+ pipelines from Alberta to the Golf of Mexico. A few more people would become $$$B.
The future Trans-Mountain pipeline will do about the same for many Asian countries. China will soon control about 50% of Canadian Tar Sands production or more than enough to feed the large diameter Trans-Mountain pipeline.
Posted by: HarveyD | 28 March 2012 at 09:12 AM
I was reading about the amount of natural gas used to process tar sands. Not only is it needed to cook the stuff, but a LOT goes into making hydrogen to produce the syncrude.
This seems like such a waste it makes me wonder why they do it. They say as long as oil is above $50 per barrel, it is competitive. I keep coming back the the phrase "scraping the bottom of the barrel" almost literally.
The XL pipe is about 1/2 million barrels per day, a tanker carries 2 million barrels. It does not look like the XL will help U.S. motorists much, but it will make a ton of money for the tar sands people and pipeline owners.
Posted by: SJC | 28 March 2012 at 10:03 AM
What, you mean FauxNews was wrong and the XL pipe is not the silver bullet to $2/gallon gas?
I'm shocked, shocked I tell you. :-/
Posted by: ai_vin | 28 March 2012 at 03:15 PM
Jimr: We already have more refining capacity than we need. Cheaper to feed the existing ones with a new pipe than to build a new refinery on the Mississippi. Besides that, we already have plenty of refineries on the Mississippi. Anyway, building a new one would be almost impossible these days with all the permits and NIMBY folks.
Posted by: vrd863 | 28 March 2012 at 05:01 PM
The USA and other advanced countries have not been exclusivly grown wealthy by extracting minerals.
Manufacturing is a "Value-added" proposition. It doesn't matter whether that "value added" is provided by taking iron or aluminau ore as an input, and then exporting automobiles, airplanes or ships, there is "value added".
The same thing applies to Petroleum refining. "Value added" comes from the refining process itself. A hundred dollar barrel of raw petroleum becomes several hundred or a thousand dollars of more value. "Value added" refined products are then used in fuels, polymers, pharmeceuticals of as components in other manufactured goods.
America and every country needs to earn its foreign exchange to pay others for goods it can't or won't produce on its own.
It is not criminal in any way to "value add" and then even export the "value added" product, even if it is Oil based.
Posted by: Stan Peterson | 29 March 2012 at 12:11 PM
Good point Stan. Now if only we(me and my fellow Canadians) could convince our government to "value add" our oil before it gets piped down to you yanks. Forget building a new refinery on the Mississippi, we need to build one of those big, ugly, smelly things near Stephen Harper's home in Calgary! Maybe then he wouldn't be so quick to dismiss clean energy.
Posted by: ai_vin | 29 March 2012 at 01:18 PM
Excellent idea ai_vin.
It would create 1000+ new jobs, more profit for the oil industry, more revenues for Alberta and Canada and a few added fetid scents for Calgary's folks. I vote for that.
Posted by: HarveyD | 30 March 2012 at 01:28 PM
I thought you might like that. :)
Posted by: ai_vin | 30 March 2012 at 09:11 PM
Is it too much to ask that we try to make it through a year without a pipeline leaking?
http://online.wsj.com/article/SB10001424052702303916904577376052971265394.html
Posted by: ai_vin | 01 May 2012 at 10:50 AM