TORONTO (Reuters) - Enbridge Inc (ENB.TO), Canada’s No. 2 pipeline company, expects to complete an expansion of its newly reversed oil pipeline to Texas refineries by the end of this year, the company’s incoming chief executive said on Monday.
That would be sooner than previous forecasts used by the company and its U.S. partner.
Enbridge and Enterprise Products Partners LP (EPD.N) have been saying for months that they would boost the capacity of the Seaway pipeline from the Cushing, Oklahoma, storage hub to 400,000 barrels a day from 150,000 sometime in the first quarter of next year.
It is one of a number of pipeline projects aimed at curing a bottleneck at the massive pipeline hub, which is expected to reduce deep price discounts for oil that travels there from rapidly expanding U.S. and Canadian oil fields.
“We expect to bring another 250,000 barrels a day of capacity by the end of this year. But at some point, when we twin that Seaway line, we’ll start to see a relaxing of this basis differential between Cushing and the Gulf Coast,” Enbridge President Al Monaco told reporters following a speech in Toronto.
Monaco is slated to become CEO of the company, which moves the bulk of Canadian oil exports to the United States, later this year.
Faster-than-expected growth in North American oil output means his company’s other pipelines could be at full capacity as soon as 2016 despite a recently announced C$3.2 billion ($3.1 billion) expansion of its system, he said.
The company expects to complete the expansion of its North American pipeline network in 2014, bulking up its 2 million bpd mainline, and tapping new refining markets in Quebec. The planned mainline expansion will add more than half a million barrels a day of new capacity within two years.
However, any relief for oil producers from the 2014 expansion could be short-lived as forecasts call for production from Canada alone to rise by more than half by the end of the decade.
That could choke the system once more if lines such as Enbridge’s planned 525,000 bpd Northern Gateway pipeline to the Pacific Coast are not completed.
“I think we will be capacity-constrained going forward, probably in the range of 2016 and 2017,” Monaco said. “There’s a number of opportunities out there to further expand capacity, I think one of them, frankly, that is a great opportunity is Gateway ... And the advantage of Gateway, of course, is that it accesses a very large market.”
The C$5.5 billion Gateway project would offer Canadian producers their first significant access to booming Asian markets and steer oil away from the glutted U.S. Midwest if completed on schedule in 2017.
The project is supported by oil producers and the Canadian government, but it is bitterly opposed by environmentalists and by many British Columbia aboriginal groups concerned about potential oil spills. Even if the line is approved by regulators, court challenges could further delay construction.
Enbridge shares fell 24 Canadian cents to C$39.14 on the Toronto Stock Exchange on Monday.
Writing by Scott Haggett and Jeffrey Jones; Editing by Peter Galloway and Bob Burgdorfer