Enbridge to pump $7bn into pipeline replacement
Energy transportation giant Enbridge (NYSE:ENB)
says it will spend $7 billion replacing a pipeline that runs between Edmonton, Alberta and Superior, Wisconsin, nearly doubling its capacity.
This program will complement the existing Line 3 segment replacement program to include all remaining segments between Hardisty, Alberta and Superior.
The replacement work will allow the 46-year-old line to operate at a maximum capacity of 760,000 barrels per day, compared with the current 390,000bpd – half of its design capacity, Reuters reported.
Mainline shippers have agreed to pay surcharges on all barrels moving on the mainline "to provide an appropriate return on the additional capital required," the company wrote in a news release late Monday evening. Six crude oil pipelines including Line 3 make up the mainline.
"We work closely with our customers to understand their needs now and into the future; the L3R Program will provide high reliability and flexibility to accommodate the level of throughput we expect they will require," CEO Al Monaco said in a statement. "The increased reliability of throughput on our system will provide our customers with assured service to key markets."
The Canadian portion of the project will run about $4.2 billion while the US work, to be undertaken by Enbridge Energy Partners (NYSE:EEP), will cost approximately $2.6 billion.
"Under the L3R Program, all segments of the line between Hardisty and Superior will be replaced with new pipe using the latest available high-strength steel and coating technology. Long-term integrity costs to maintain the line will be substantially reduced and the reliability of service will be enhanced."
Enrbidge will not need a US presidential permit for the work because it's “categorized as a maintenance project," Monaco told the Financial Post.
The need for a presidential permit has been competitor TransCanada's biggest obstacle to building its controversial Keystone XL pipeline.
The Line 3 Replacement Program is the largest project in Enbridge's history. Regulatory applications will be submitted in 2014; completion is expected in the second half of 2017.
In other Enbridge news, the National Energy Board recently announced that on Thursday it would issue its decision on the company's controversial proposal to reverse the flow and increase the capacity of the Line 9B pipeline which flows from Montreal to western Ontario. Some opponents have argued that the 38-year-old couldn't handle the increased capacity .