Enbridge mulls another pipe reversal as profit rises

Wed May 9, 2012 12:52pm EDT
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CALGARY, Alberta (Reuters) - Enbridge Inc (ENB.TO: Quote), whose lines move the bulk of Canada's crude oil exports to the United States, said on Wednesday it would want to play a role in any potential reversal of the massive Capline oil pipeline as it looks to move oil sands crude to refineries on the eastern Gulf of Mexico coast.

The company, which reported a better-than-expected 14 percent rise in first-quarter adjusted profit on Wednesday, said it would be interested in participating in any acquisition of the underused 630-mile line that now takes oil from Louisiana to southern Illinois.

"We definitely could benefit from it," Pat Daniel, Enbridge's chief executive, said on a conference call. "There are issues to be resolved around existing refineries along Capline and where they get their crude from, but we're watching and monitoring that one very closely."

With production from Alberta's tar sands set to rise to nearly 2.7 million barrels per day by 2015 from a current 2 million bpd, Enbridge and its rivals are looking for ways to move Canadian oil away from the U.S. Midwest market - where a glut of crude has depressed prices - and into the Gulf Coast refineries.

The Capline, operated by Royal Dutch Shell Plc (RDSa.L: Quote), once carried as much as 1.2 million barrels of oil per day to Midwest refineries. But shipments have dwindled to under 200,000 bpd as Canadian and Bakken crudes supplant the more expensive imported and Gulf of Mexico supplies that the line ships.

The low volume has raised speculation that the line could be better used to carry Canadian and North Dakotan crude to Louisiana refineries. Daniel said Enbridge has often looked for ways to send Canadian crude to the eastern Gulf coast and its existing pipelines could feed crude to the reversed line.

To be sure, the line's current customers have not yet backed a reversal and no one has stepped forward to acquire the line or take charge of a project to reverse it.

Earlier this month Marathon Petroleum Corp (MPC.N: Quote), which owns a stake in the line, said Capline remains an important supply link for its 212,000 bpd refinery in Catlettsburg, Kentucky.

SEAWAY REVERSAL   Continued...