* Line to expand to 275,000 bpd from 180,000
* Need for diluent on rising oil sands output
CALGARY, Alberta, May 6 (Reuters) - Enbridge Inc, Canada's largest pipeline company, said on Monday it would expand its 180,000 barrel per day Southern Lights pipeline after customers looked for more space on the line than it could handle.
The company said the size of the line, which carries ultra-light crude oil and natural gas liquids from Illinois to Alberta, where it is blended into tarry bitumen, will be expanded to handle 275,000 bpd.
The company said a recent open season for 50,000 bpd of space on the existing line showed there was significantly more demand in the market. In an open season, shippers sign long-term contracts for pipeline capacity.
"Based on the success of the open season, and the fact that the current capacity available for contracts has been fully subscribed, Enbridge will now pursue an expansion of the Southern Lights system," Enbridge said in a statement.
Southern Lights, completed in July 2010, runs 1,588 miles (2,556 kilometers) from the outskirts of Chicago to Edmonton, Alberta, carrying the diluent that is needed to blend into thick bitumen so it can flow on pipelines.
By 2025, the Canadian Association of Petroleum Producers expects oil sands output to reach 3.7 million barrels per day, of which 3.3 million barrels would be bitumen requiring 1 million barrels of diluent to flow, up from 275,000 bpd last year.
Enbridge said it would launch an open season for the expansion later this year.