Oil Sands Truth: Shut Down the Tar Sands

Enbridge Plans Pipes to Texas, Still Promoting Gateway

Enbridge pushing plan to pipe oil to Texas

Posted AT 6:24 PM EDT ON 04/04/07

Enbridge Inc. is pushing ahead with a plan to move Canadian oil to Texas, preparing to present a detailed plan to potential customers by the end of June.

“Getting oil to the Gulf Coast is very important for Canadian producers,” Patrick Daniel, chief executive officer of Enbridge, said in an interview Wednesday.

Enbridge plans to hold what is called an open season for the Texas pipeline in the next several months, a typical process in the industry where potential shippers are invited to make commitments to move crude oil.

Mr. Daniel said Enbridge has not yet made a decision on what Texas pipeline proposal it plans to put forth. One possibility, which Enbridge unveiled last summer, would be a direct link from Alberta that could cost $3.6-billion (U.S.) and move 400,000 barrels a day.

There is a scramble in the energy business to connect increasing production in the Alberta oil sands to new markets in the United States beyond the traditional hub in the Chicago area.

Enbridge, Canada's largest oil pipeline company, faces competition from several companies in its plan to move Canadian oil to the Gulf Coast, which is home to about half of the refining capacity in the United States. The region has been traditionally supplied by Mexico and Venezuela.

Enbridge's main competitor is TransCanada Corp., which is located across the street from Enbridge headquarters in Calgary.

TransCanada is proceeding with a $2.1-billion project for a new oil pipeline called Keystone that would connect Alberta with southern Illinois, along with a further link to Cushing, Okla., and potentially a final connection with Texas.

TransCanada is working closely with ConocoPhillips Co. of Houston on Keystone, and Conoco could provide a link to Texas with its own existing infrastructure.

Altex Energy Ltd., a privately held Calgary company, is another contender. The company is run by Jack Crawford, who helped spearhead the building of the Alliance natural gas pipeline from British Columbia to Chicago in the 1990s. Altex is working on a direct Alberta-Texas oil link, which had originally been budgeted at $3-billion for a 250,000-barrel-a-day pipeline.

“We're still working away with a group of prospective shippers,” Mr. Crawford said Wednesday. He added that the Altex line may be larger and cost more, and that the oil producers will likely make major decisions about new pipelines in the next six months.

In a presentation last month, Enbridge estimated that new pipeline capacity to handle an additional 2.1 million barrels a day will be required by 2015.

While industry attention is focused on moving Canadian oil to new markets in the United States, Enbridge is still hopeful it will eventually build its Gateway pipeline, which would connect Edmonton with the British Columbia coast for export, largely to China. In 2005, Enbridge signed a deal with PetroChina International Co. Ltd. to move forward on Gateway, but the project hasn't advanced because China hasn't clinched a significant supply deal in the oil sands.

Gateway was originally planned for 2010, but has been pushed back as far as 2014.

Mr. Daniel said expanding Canadian oil exports beyond the United States is still important for the domestic industry.

“We feel Canada will never get full price for our oil unless we move some of it offshore,” Mr. Daniel said.

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