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Enbridge planning pipeline expansion

Enbridge Inc. will spend $400 million to expand its Waupisoo Pipeline in Alberta after securing new contracts for the shipping of oilsands crude.

CALGARY — Enbridge Inc. will spend $400 million to expand its Waupisoo Pipeline in Alberta after securing new contracts for the shipping of oilsands crude.

The Calgary-based pipeline company (TSX:ENB) said Monday it has received shipper commitments that add up to 229,000 barrels per day of capacity on the pipeline, which carries oilsands crude to terminals near Edmonton.

“Based on development activity underway within the oilsands on both existing and new projects, together with our strong competitive position as the largest operator in the region, we expect to see continued attractive investment opportunities of this sort for some time to come,” said Enbridge chief executive officer Pat Daniel.

The expansion is expected to begin contributing to Enbridge’s earnings per share by 2013.

It will add about 65,000 barrels per day of capacity in the second half of 2012 and about 190,000 barrels per day when it reaches full service capacity in the second half of 2013.

Enbridge said it will make the upgrades over three years on the pipeline, which stretches 380 kilometres from the Cheecham terminal in Northern Alberta to the Edmonton mainline terminal.

In a note to clients, UBS Investment Research analyst Chad Friess said the expansion will add to Enbridge’s already dominant position in the oilsands.

The “announcement adds to (Enbridge’s) momentum in the region which has recently resulted in several contract wins,” he said, citing projects planned by Cenovus Energy Inc. (TSX:CVE), Imperial Oil Ltd. (TSX:IMO) and Suncor Energy Inc. (TSX:SU).

Although Enbridge’s controversial Northern Gateway pipeline to the West Coast may have trouble gaining industry support, Friess said “we expect (Enbridge) to continue leveraging its dominant position in the regional oilsands shipping into further contract wins.”

Also Monday, Enbridge said it would take part in a project to capture and store carbon dioxide emitted from an Alberta coal-fired power plant owned by TransAlta Corp. (TSX:TA) and Capital Power Corp. (TSX:CPX).

Project Pioneer involves retrofitting the Keephills 3 plant near Edmonton. Once complete, it is expected to be one of the largest carbon capture and storage systems in the world and among the first to have an integrated underground storage system.

In October, Project Pioneer received $778 million in federal and provincial funding.

Most of the captured CO2 will be shipped via pipeline to mature oilfields, where it will be pumped into reservoirs to boost output. The rest will be permanently stored underground and prevented from entering the atmosphere.

Enbridge, Canada’s largest oil pipeline operator and a major natural gas distributor, brings expertise in the design and construction of pipeline infrastructure. It also brings extensive knowledge of CO2 sequestration through its involvement in other projects in Alberta and Saskatchewan.

“One of the most pressing environmental issues facing us today is the impact of greenhouse gas emissions on climate change,” said Daniel.

“By working with the Project Pioneer partners to advance CCS technology, we’re pleased to contribute to what may be one of our most significant solutions.”

Shares in Enbridge were up 60 cents at $49.66 in afternoon trading on the Toronto Stock Exchange.