Enbridge To Spend C$120 Million On Expanding Eastward Oil Shipments
October 03 2011 - 6:05PM
Dow Jones News
Enbridge Inc. (ENB, ENB.T) said Monday it will spend C$120
million on two pipeline projects to expand the eastward flow of
crude oil from producers in western Canada.
The Calgary pipeline company and its Houston-based sister
company, Enbridge Energy Partners L.P. (EEP), will expand a
645-mile pipline from Superior, Wisc., to Sarnia, Ontario, by
50,000 barrels a day to 540,000 barrels a day.
Enbridge will also reverse the direction of part of a pipeline
that takes oil westward to Sarnia from refineries in Montreal,
reversing the flow eastward to Westover, Ontario, at a cost of C$20
million.
The high discount of oil in the midwestern U.S. to international
prices, due to an oversupply of oil at the midwestern hub in
Cushing, Okla., means "there is significant value to be captured by
increasing the pipeline capacity to move western Canadian and
Bakken light crude supply to eastern refiners," Stephen Wuori,
president of Enbridge's liquids pipelines division, said in a
release.
The expansion and reversal will be done on the existing
pipelines, without building new lines, the company said.
An oversupply of oil at the Cushing storage hub, with few ways
to reach the coast, has West Texas Intermediate crude oil--the
futures contract tied to Cushing--trading at $76.48 a barrel in
recent trading, a hefty discount compared with $100.90 a barrel on
the Brent future contract tied to the international seaborne oil
market.
Enbridge indirectly owns a 26% stake in Enbridge Energy
Partners.
Enbridge shares closed down 3.1% to $30.93 on the New York Stock
Exchange, amid a broader decline in energy equities.
-By Edward Welsch, Dow Jones Newswires; 403-229-9095;
edward.welsch@dowjones.com
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