Enbridge to spend $582 million to expand Bakken oil pipeline

CALGARY — Two Enbridge Inc. affiliates are spending about $582 million on a pipeline expansion to accommodate higher volumes of crude from a promising energy region around the Canada-U.S. border.

CALGARY — Two Enbridge Inc. affiliates are spending about $582 million on a pipeline expansion to accommodate higher volumes of crude from a promising energy region around the Canada-U.S. border.

The pipeline giant’s U.S. affiliate, Enbridge Energy Partners (NYSE:EEP) is contributing around US$370 million, or $392 million, for the U.S. project. Its Canadian counterpart, Enbridge Income Fund (TSX:ENF.UN), is spending $190 million for its share in Canada.

“We anticipate substantial further production growth based on discussions with producers, and our own regional supply analysis,” said Steve Wuori, the Enbridge executive in charge of liquids pipelines.

“We are well positioned to provide shippers with attractive transportation options based on our extensive existing operations in the region.”

The system taps into the Bakken and Three Forks formations, which stretch through parts of Saskatchewan, Montana and North Dakota. In recent years, horizontal drilling and other techniques have boosted production from tough-to-access oil pools in that area.

The expansion, slated for completion in early 2013, will increase takeaway capacity from the region by 145,000 barrels per day, which can readily be expanded to 325,000 barrels per day at a relatively low cost.

The project announced Tuesday will start in the heart of the Bakken, near Tioga, N.D., and end at an Enbridge mainline terminal at Cromer, Man.In January, Enbridge completed a 51,000 barrel per day expansion to its North Dakota System.

Three separate projects in Saskatchewan will increase capacity there by a total of 125,000 barrels per day later this year.

“We are confident that this series of expansions will relieve much of the current demand for pipeline capacity out of the Bakken and Three Forks production areas as well as provide the foundation for timely future expansions to meet the needs of the region”, said Wuori.

Enbridge Energy Partners and Enbridge Income Fund are affiliates of Calgary-based Enbridge Inc. (TSX:ENB), Canada’s largest crude transporter and a major natural gas distributor.

Enbridge owns 27 per cent of the American pipeline operator and has a 72 per cent economic interest in the Canadian affiliate and manages the day-to-day operations of both.

Units in the fund closed flat at $14.46 Tuesday on the Toronto Stock Exchange.

Enbridge Energy Partners shares rose two U.S. cents to US$54.97 on the New York Stock Exchange.

Enbridge Inc. shares rose four cents to $52.29 on the TSX.

Enbridge, with 4,500 employees, operates the world’s longest crude oil pipeline network and Canada’s largest natural gas distribution company through Enbridge Gas Distribution Inc., which has nearly 1.6 million residential, commercial and industrial customers in Ontario, Quebec and upper New York State.

The company also has natural gas gathering, processing and transmission businesses as well as international energy projects, liquids marketing, electric power distribution, and retail energy products and services.