CALGARY — Canada’s two biggest pipeline operators are pitching projects to connect North America’s largest crude oil storage hub with the continent’s biggest refining centre.
Calgary-based Enbridge Inc. (TSX:ENB) is in talks with potential customers for its Monarch pipeline, which would run from Cushing, Okla., to the U.S. Gulf Coast. It would have a capacity of between 150,000 and 350,000 barrels of crude per day.
“We believe that this project is necessary to alleviate that light crude bottleneck in Cushing and hopefully get (West Texas Intermediate) back closer to world crude oil pricing,” Enbridge vice-president Vern Yu said.
“We’re out there talking to prospective shippers right now, and hopefully we’ll have some news on that project in the first quarter of next year.”
Meanwhile, TransCanada Corp. (TSX:TRP) is working on a project called Cushing Marketlink, which would have 150,000 barrels of daily capacity.
Cushing Marketlink would build on TransCanada’s massive Keystone system. An initial phase connecting oilsands crude to the U.S. Midwest is already in service and the company aims to expand the line to the Gulf Coast in 2013.
Cushing Marketlink would cost about US$70 million, said Paul Miller, TransCanada’s vice-president of oil pipelines. The price tag of the entire Keystone system is US$12 billion.
The advantage of TransCanada’s project is that it offers shippers a direct line to the Gulf Coast from the heart of the Bakken light oil play in Montana, Miller said.
“Once they’re on our pipeline, they never see a break-out tank, and they never see another connecting pipeline,” he said.
“They don’t experience any delay in transit. They don’t experience product degradation associated with using a variety of breakout tanks along the way. Once they’re in our system, they get to their delivery point quickly and cleanly.”
Yu said Enbridge’s offering gives customers more options — whether it be shipping to markets in the U.S. Midwest, Cushing, or the Gulf.
“Our view is that the shipper would like to have as much optionality for their barrel and try to maximize their netback,” Yu said.
“And transporting in our system, that’s what we allow for.”
Enbridge, known mainly as a shipper of crude oil, has been under fire in recent months after two high-profile pipeline leaks in the U.S. Midwest.
In July, a pipeline in southern Michigan spilled millions of litres of crude into the Kalamazoo river. Less than two months later, another line leaked in the Chicago area.
Those incidents provided ammunition to critics who don’t want Enbridge to build a $5.5-billion pipeline connecting oilsands crude to the port of Kitimat B.C.
Aboriginal groups and environmentalists have been fiercely fighting Enbridge’s Northern Gateway proposal, which would allow Canadian oilsands producers to sell their product in Asian markets.
Enbridge shares rose 1.9 per cent to $56.88 on the Toronto Stock Exchange. TransCanada’s were flat at $35.95.