(Corrects 9th paragraph to show Marathon has contracted to take some of the initial capacity)
* New pipeline added to plan in Illinois
* Total expansion would add 400,000 bpd
* Booming light crude output driving plans
By Jeffrey Jones and Scott Haggett
CALGARY, Alberta, Dec 6 (Reuters) - Enbridge Inc on Thursday proposed a C$6.2 billion ($6.3 billion) expansion of its oil pipeline system, aimed at moving surging volumes of light crude from Western Canada and the North Dakota Bakken to refineries in the eastern part of the continent and U.S. Midwest.
The series of projects, which would add a total of 400,000 barrels per day of overall capacity to the huge Canada-to-United States network, is larger than Enbridge had proposed previously as it sought to address the need for new transport capacity.
"This is a collection of projects which together will serve to connect growing light oil supplies from the Bakken play in North Dakota and from Western Canada to premium refinery markets in the US Midwest and Eastern Canada," Al Monaco, the company's chief executive, said on a conference call.
Booming production of oil sands-derived crude from Alberta and shale oil in Western Canada and the northern United States - and limited capacity to move the supplies to market - are behind the complex series of projects across the system, which currently moves more than two million barrels a day.
Canada is the largest source of crude oil imports to the United States, shipping more than 2 million barrels per day to refineries primarily in the Midwest. The International Energy Agency said last month that output from Alberta's oil sands alone is expected to nearly triple to 4.3 million bpd by 2035.
The company's U.S. affiliate, Enbridge Energy Partners , will foot slightly more than half of the total bill for the expansion plan, or $3.4 billion.
In October, the company said its "light oil market access program", which includes projects in Canada, North Dakota, the U.S. Midwest, and between Sarnia, Ontario and Montreal, would cost C$5.5 billion. But Enbridge added a 265 km (165-mile) pipeline between Flanagan and Patoka, in Illinois, at a cost of C$800 million, the company said on Thursday.
"We've been developing this concept for awhile and we're pleased today to have firm commercial underpinning through a long-term capacity agreement with an anchor shipper and that's going to allow us to proceed with the project," Monaco said. "Accessing the Patoka hub is critical for our shippers because Patoka provides a launching point to move light crude to (western Pennsylvania and Ohio) where there's significant light oil refining capability."
Some of the initial capacity has already been contracted by Marathon Petroleum Corp, which would take the light crude for its Midwest refineries.
The various expansions will be put into place between 2014 and 2016, the company said.
The new and expanded lines are part of Enbridge's C$26 billion expansion plan, which includes the controversial C$6 billion Northern Gateway line, which would take oil sands crude to an export port on British Columbia's northern Pacific coast.
The company Flanagan South project will twin its existing 193,000 bpd Flanagan to Cushing, Oklahoma, Spearhead pipeline, boosting capacity to 600,000 bpd of Canadian and North Dakota crude.
The project will feed the Seaway pipeline owned by Enbridge and Enterprise Product Partners LP. That line, from Cushing to the refining cluster on Texas' gulf coast, is being expanded from 150,000 bpd to 400,000 bpd in the first quarter of next year. A twin line planned for 2014 will further boost capacity to 850,000 bpd.
Enbridge also said it increased its quarterly dividend by 12 percent to 31.5 Canadian cents a share.
Enbridge shares fell 3 Canadian cents to C$39.99 on the Toronto Stock Exchange on Thursday. The shares have risen 15 percent over the past 12 months while the exchange's benchmark index has gained 0.6 percent over the same period. ($1=$0.99 Canadian) (Reporting by Jeffrey Jones; Editing by Dan Grebler and David Gregorio)