Enbridge Unveils North American Plans to Expand Oil, Natural Gas Pipeline Network

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Enbridge Inc. has unveiled a $1.8 billion growth budget for its oil and natural gas pipelines, with additions at the northern and southern ends of the network in Alberta and the Gulf of Mexico region.

An $800 million commitment to complete four Gulf Coast natural gas projects between 2020 and 2023 stood out as the biggest combined spending item announced at the Calgary conglomerate’s annual investor day in New York City on Tuesday.

The gas quartet includes a pipeline system for Royal Dutch Shell plc’s Vito project in the Gulf of Mexico deepwater, expansion of the Cameron Lateral to connect Texas Eastern with liquefied natural gas export facilities, and the Gulfstream and Sabal Trail gas pipelines into Florida.

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At the southern end of the network, Enbridge plans to pay $600 million for 22.75% ownership of the Gray Oak oil pipeline now under construction. Gray Oak, set for completion by the end of next year, would deliver Permian Basin oil to South Texas near Corpus Christi and beyond.

In Alberta, Enbridge also is adding to its oilsands delivery network with the C$265 million ($200 million) purchase of pipeline and terminal assets in northern Alberta from producer Athabasca Oil Corp.

Elsewhere on Enbridge’s Canadian oil export Mainline into the Lower 48, the growth agenda includes engineering improvements forecast to add 50,000-100,000 b/d in the first half of 2019 to current flows of 2.875 million b/d. By the end of next year, replacing the system’s aged Line 3 is scheduled to add a further 370,000 b/d.

In addition to facilities additions, Enbridge disclosed that work is in progress on negotiating a new deal for oil shippers as a result of heated competition for space on the pipeline that has contributed to deep price discounts on Canadian heavy crude.

The plan includes a hierarchy of firm “priority access” contracts, lasting for up to 20 years, for 90% of the oil pipeline system’s capacity, with 10% left open for spot pipeline bookings. An application to the National Energy Board is to seek implementation of the new regime as of 2021.

“It’s a top priority to further extend the consistent long-term growth track record of our liquids business by providing new win-win tolling options and low-cost throughput enhancements on our Mainline,” President Al Monaco said.

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