Enbridge, Enterprise to double Seaway pipeline capacity
(Reuters) - Enbridge Inc (ENB.TO: Quote) and Enterprise Products Partners LP EPD.N will more than double the capacity of the Seaway Pipeline, easing a major oil glut in the United States that has led to an unprecedented distortion in crude markets.
The expansion would add 450,000 barrels per day (bpd) of capacity to the Seaway system, raising its capacity to 850,000 bpd by mid-2014, Enbridge said in a statement.
The company also plans to increase the size of its Flanagan South Pipeline from Flanagan, Illinois to Cushing, Oklahoma, to a 36-inch diameter line with an initial capacity of 585,000 bpd.
The estimated cost on the Flanagan line would increase to $2.8 billion from $1.9 billion. Enbridge's share of the cost of the Seaway pipeline twin line and extension is expected to be about $1 billion.
The companies are racing to unlock a glut of crude in the U.S. Midwest, which has built up over the year due to rising supplies from Canada and North Dakota.
The ballooning inventories at Cushing, the storage hub for U.S. crude oil traded on the futures market, has led to a greater price difference between U.S. crude and the European benchmark Brent.
U.S. crude's discount to Brent hit a record near $28 in October. The spread is now around $18 a barrel.
"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," Patrick D. Daniel, chief executive officer, Enbridge, said in a statement.