Liquids Pipelines
Enbridge is changing the face of how crude oil is transported in North America. Over the next four years – expanding and extending from our existing geographically well-positioned infrastructure – we will almost double the size of our Liquids Pipelines business segment, further diversifying the markets we serve and playing an even more significant role in energy delivery in North America.
The thrust of our current strategy is growth through the development and construction of new infrastructure. Enbridge is advancing the development of $12 billion of organic growth projects, which support average annual organic earnings per share growth rates for Enbridge Inc. shareholders of 10 per cent over the next four years, and similar long-term per-unit growth rates for Enbridge Energy Partners’ (EEP) unitholders. The commercially-secured projects, including those being undertaken by EEP, are all expected to be completed within the next four years.
Regional Oilsands Infrastructure
Our construction of regional pipeline delivery infrastructure in the oilsands corridor between Fort McMurray and Edmonton, Alberta, continued throughout 2007 and 2008. We built the Waupisoo pipeline, and placed it into service on May 31, 2008. With the commencement of production from the Long Lake Oil Sands Project in the first quarter of 2008, we initiated all of our Athabasca pipeline expansion contracts, and placed the pipelines into service. In late 2007, Enbridge was chosen by Fort Hills Energy L.P. to build pipeline and related facilities connecting the Fort Hills oilsands mine north of Fort McMurray with the Sturgeon Upgrader in the Edmonton area. Project execution planning between Enbridge and the Fort Hills Energy Partners continues with a planned in-service date of mid-2011.
Mainline Capacity
In Canada, Enbridge completed the first phase of our Southern Access expansion project in the first half of 2008, and is now constructing the second phase of the project.
In the first quarter of 2008, we received National Energy Board (NEB) approval for the Canadian segment of our Alberta Clipper expansion project and our Line 4 extension. We began construction work on Alberta Clipper in August 2008, and on the Line 4 extension project in September 2008. We expect both pipelines to be in service in early 2009.
Diluent Supply
Enbridge has substantially completed our construction activities on the U.S. section of the Southern Lights pipeline from Superior to Delavan, Wisconsin. We began constructing the remaining U.S. segments in June 2008. We received NEB approval for the Canadian portion of the Southern Lights pipeline in the first quarter of 2008 and, with the approval, began modifying our Line 2 pipeline, and constructing the new Southern Lights pipeline and station facilities. We expect Southern Lights to be in service in late 2010.
New Market Access
The Spearhead pipeline expansion, to be effected through additional pumping stations, will increase our capacity from Chicago, Illinois, to Cushing, Oklahoma, by 65,000 barrels per day to 190,000 barrels per day. Detailed engineering design and final regulatory approvals are nearing completion, and construction is scheduled to start in the fall of 2008.
Enbridge is re-evaluating the timing of the U.S. portion of our Southern Access extension project as a result of delays that we have encountered in the regulatory process. We remain committed to meeting the demands of shippers that are transporting crude oil supplies from the Chicago area to the Patoka, Illinois hub, and we are working with customers to reposition the project such that it is commercially appropriate for the market. This work includes creating a rate structure that the U.S. Federal Energy Regulatory Commission (FERC) is expected to approve. State regulatory approvals on the Southern Access project are pending.
Our development of Enbridge’s Northern Gateway pipeline from Edmonton to Kitimat, B.C. continues. The pipeline has a target in-service date of between 2012 and 2014, which supports our customers’ anticipated need for new capacity in this timeframe.
Based on feedback from shippers, Enbridge has modified our approach to providing increased access for western Canadian crude oil to U.S. Gulf Coast markets. In the near term, we will focus on smaller scale alternatives involving low-cost reconfiguration of existing facilities to accommodate a modest amount of volume as early as 2010.
In addition to serving Canada and the eastern U.S., our Trailbreaker project will increase capacity on Enbridge’s mainline east of Chicago to bring western Canadian crude oil to eastern markets. It will also establish access to the U.S. Gulf Coast markets and eastern seaboard. Subject to finalization of industry support and regulatory and other approvals, Enbridge estimates the Trailbreaker project will be in service around 2010.
Enbridge will continue to develop the 400,000-barrels-per-day Texas Access pipeline to provide the lowest-cost, large-scale transportation solution to meet shippers’ post-2010 requirements, with an expected in-service date of between 2012 and 2014.
In August 2008, Enbridge and BP Pipelines (North America) Inc. announced that we had agreed to develop a new delivery system to transport Canadian heavy crude oil from Flanagan, Illinois, to Houston and Texas City, Texas, using a combination of existing facilities and new pipeline construction. The new delivery system is expected to be in service by late 2012, and to have an initial total system capacity of 250,000 barrels per day into the Gulf Coast.
Terminalling and Tankage Infrastructure
We continue to increase our investment in contract terminals, and tankage construction at the Hardisty Terminal in Alberta is under way. Once complete, it will be one of the largest crude oil terminals in North America. As well, Enbridge has continued to invest in crude oil tankage at our terminal in Cushing Oklahoma.