U.S. Gulf Coast Access

Enbridge’s View of U.S. Gulf Coast Market Access

Based on industry projections of a slower than anticipated ramp up in oil sands production, Enbridge believes that a phased approach to reaching the U.S. Gulf Coast makes the most sense at this time. This involves the joint Trailbreaker Project (Line 9/Portland reversal) in the early years (2010-2012) and then the Texas Access joint venture pipeline.

Below is Enbridge’s view of U.S. Gulf Coast Market Access:

Enbridge continues to discuss the Texas Access pipeline proposal with industry and prospective shippers. Our recent Open Season process confirmed that a large volume pipeline to the U.S. Gulf Coast requires substantially all of the capacity to be contracted in order to offer economical tolls for shippers and acceptable economics to the carrier. The Open Season also confirmed that significant new production from the oil sands is required to support the volumes needed for a new pipeline to the U.S. Gulf Coast. The delay in the ramp-up of production from the oil sands requires a phased approach that more closely aligns the profile of the ramp-up of oil sands production to pipelines to serve the U.S. Gulf Coast market. We believe Texas Access should go into service in 2012 or shortly thereafter, when new production is available to support a large diameter pipeline to the Gulf.
The Texas Access project, from Patoka, Illinois, to the Houston area, can be built at a cost of approximately $2.6 billion compared to $7 billion required to build a bullet pipeline from Alberta to the Gulf. Required financial commitments from shippers are therefore correspondingly much lower on Texas Access.
Texas Access shippers are assured of upstream capacity being available because of Alberta Clipper and Southern Access (up to 1.2 million bpd) and Southern Access Extension (up to 800,000 bpd).
Enbridge’s Trailbreaker project offers shippers “right-sized” and “right-timed” access to the U.S. Gulf Coast. The planned reversal of Enbridge’s Line 9 and expansions to Line 6B; combined with the reversal of one of the two lines owned by the Portland-Montreal Pipeline, will provide industry with the earliest access to incremental volume potential of up to 200,000 bpd of heavy crude into the U.S. Gulf Coast in 2010.
Trailbreaker will also deliver significant benefits for Canadian refineries as increased Canadian supply to Sarnia and Montreal will help to offset foreign supply.
As sufficient volumes to support Texas Access are developed, Trailbreaker can be shifted to provide access to the PADD I U.S. East Coast market for light crude; mainly growing synthetic volumes from the oil sands.
Enbridge expansion projects, on the common carrier mainline, most of which are already under construction, give us a strong starting position by paving the way to move 400,000 bpd from Western Canada to Patoka, two-thirds of the way to the U.S. Gulf Coast. These projects include Alberta Clipper, Southern Access Expansion and the proposed Southern Access Extension. Enbridge can then add incremental capacity to that entire route through a very cost effective approach of only adding pumps – no new pipe required and all within existing rights-of-way.

We believe that the phased approach to the U.S. Gulf Coast market offers the greatest flexibility and lowest cost to shippers. The combination of mainline capacity expansions, Texas Access, and Trailbreaker gets Canadian heavy oil moving to the Gulf by 2010 and ramps up to match production increases to enable up to 800,000 bpd to move to this market. This approach also provides access to multiple intermediate markets and operating flexibility in the event of upstream, downstream or pipeline disruptions.