CALGARY, ALBERTA--(CCNMatthews - July 5, 2006) - Enbridge Inc. (TSX:ENB) (NYSE:ENB) announced today that it has received commitments exceeding the planned 180,000 barrel-per-day capacity of its Southern Lights diluent pipeline through the Open Season, which was announced on May 30, 2006. Committed shippers will be prorated to an aggregate maximum of 162,000 barrels per day to retain a portion of the capacity for spot shippers.
A number of the commitments included variations from the standard form of the commitment documents, which variations are acceptable to Enbridge. Enbridge will post an amended set of documents incorporating the variations, and has extended the Open Season until July 14, 2006 at noon MDT. The Open Season was scheduled to close June 30, 2006 at 5 p.m. MDT.
The Southern Lights Pipeline will involve a combination of new construction and utilization of existing facilities. These changes will increase the light crude system capacity by approximately 45,000 barrels per day and modestly reduce all crude oil tolls. Enbridge will seek support from crude oil shippers for the regulatory applications, which will be required to obtain approval for the reconfiguration of the crude oil mainline system.
The Southern Lights Pipeline responds to interest from a number of shippers to increase the availability of diluent in Western Canada. Diluent is required to transport heavy oil and bitumen being produced in increasing volumes in Alberta. Assuming on-time completion of most major oil sands projects publicly announced to date, Enbridge forecasts that the demand for imported diluent could reach 300,000 barrels per day by early in the next decade. The combination of Enbridge's 150,000 barrel-per-day Gateway Condensate Import Pipeline along with Southern Lights will meet this need. Light hydrocarbon streams suitable for diluent purposes are becoming increasingly scarce in Alberta, but are relatively plentiful in the Pacific Basin and the U.S. Midwest.
Major elements of the Southern Lights Pipeline project include a diluent line from Chicago to Edmonton, achieved by:
- Constructing 1085 kilometres (674 miles) of 16 or 20-inch pipe from the Chicago area to Clearbrook, Minnesota. Approximately 711 kilometres (442 miles) of this construction utilizes the same right-of-way as Enbridge's Southern Access expansion between Flanagan, Illinois (just west of Chicago) and Superior, Wisconsin. The pipeline between Superior, Wisconsin and Clearbrook, Minnesota will follow Enbridge's existing right-of-way.
- Reversing the flow of Enbridge's Line 13 from Clearbrook to Edmonton.
Additionally, Enbridge plans to construct a new 20 or 24-inch pipeline to transport 185,000 barrels per day of light sour crude oil from Cromer, Manitoba to Clearbrook, and expand its existing Line 2. The result of these changes to the existing crude oil system is to increase light crude system capacity by 45,000 barrels per day from Edmonton to the U.S. Midwest. Southern Lights Pipeline will also share in the operating cost of the system between Edmonton and the U.S. Midwest. This sharing is expected to modestly reduce tolls on Enbridge's mainline system.
The preliminary estimated cost of the Southern Lights project is US$920 million (2006 dollars) and it is anticipated to be in service in 2009, coinciding with the completion of the Southern Access project.
A final decision to proceed with the pipeline project will require support from crude oil shippers, as well as successful completion of engineering, environmental permitting, public consultation and regulatory approvals. The project will also require approval of the Board of Directors of Enbridge Energy Partners (EEP) for an exchange of the 250-kilometre (156-mile) section of Line 13 owned by the Partnership for the same-length U.S. section of the new light sour line to be constructed as part of the project. EEP is expected to also benefit from increased heavy crude shipments, which will be facilitated by the diluent line.
Enbridge Inc., a Canadian company, is a leader in energy transportation and distribution in North America and internationally. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world's longest crude oil and liquids transportation system. The Company also has international operations and a growing involvement in the natural gas transmission and midstream businesses. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company, and provides distribution services to 1.8 million customers in Ontario, Quebec, New Brunswick and New York State. Enbridge employs approximately 4,600 people, primarily in Canada, the U.S. and South America. Enbridge's common shares trade on the Toronto Stock Exchange in Canada and on the New York Stock Exchange in the U.S. under the symbol ENB. Information about Enbridge is available on the Company's web site at www.enbridge.com.
Certain information provided in this news release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Although Enbridge believes that these statements are based on information and assumptions that are current, reasonable and complete, these statements are necessarily subject to a variety of risks and uncertainties pertaining to operating performance, regulatory parameters, weather, economic conditions and commodity prices. You can find a discussion of those risks and uncertainties in our Canadian securities filings and American SEC filings. While Enbridge makes these forward-looking statements in good faith, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. Enbridge assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.