Enbridge buys Conoco stake in US Seaway pipeline, will reverse crude oil flow
Enbridge has acquired ConocoPhillips’ 50% interest in the US Seaway Pipeline for $1.15 billion and has agreed with joint owner Enterprise Products to reverse the direction of crude oil flow, allowing it to carry discounted West Texas Intermediate (WTI) from Cushing, Oklahoma, to the US Gulf coast.
Pending regulatory approval, the line could operate in reversed service with an initial capacity of 150,000 bpd by the 2012 second quarter.
"The Seaway Pipeline reversal provides an early opportunity to offer Gulf Coast access to midcontinent producers and other crude oil shippers," said Patrick D. Daniel, CEO for Canada-based Enbridge.
"A Seaway reversal will provide capacity to move secure, reliable supply to Texas Gulf coast refineries, offsetting supplies of imported crude," Daniel added.
Michael A. Creel, CEO of Enterprise's general partner, said: "We congratulate Enbridge on its agreement to purchase a 50% interest in Seaway. We believe that reversing the direction of crude oil movement on Seaway and the construction of additional infrastructure will accelerate access to Gulf coast markets, reduce transportation costs, improve both producer and refiner economics and hasten the development of North America's crude oil reserves."
Following pump station additions and modifications, anticipated to be completed by early 2013, the capacity of the reversed Seaway Pipeline will be up to 400,000 bpd in mixed service. Enbridge and Enterprise said they expect that the reversed Seaway pipeline will be fully contracted.
The partners anticipate conducting an open season to validate shipper support for an expansion of Seaway, through looping or twinning.
After reversing the direction that crude oil flows on the 500-mile (805-kilometer), 30-inch diameter, long-haul pipeline, Seaway will deliver crude from Cushing into the Houston-area market by utilizing existing affiliate and third-party pipelines as well as its Texas City local pipeline system.
Enbridge and Enterprise said they will build a 45-mile (72-kilometer) pipeline that will link Seaway directly to Enterprise's ECHO crude oil storage terminal located southeast of Houston.
This will provide shippers with enhanced connectivity and more efficient transportation to the Houston refining market.
Additional investment required by the joint venture partners to reverse the line and construct supporting lateral and related facilities is expected to be approximately $300 million.
Also on Wednesday, ConocoPhillips struck an $850 million deal with a subsidiary of Caisse de dépôt et placement du Québec (CDPQ) to sell its 16.55% interest in US-based Colonial Pipeline Co.and Colonial Ventures. That transaction is anticipated to close in the first quarter of 2012.
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