CALGARY, ALBERTA--July 15, 2003 - Enbridge Inc. announced today
that it will purchase a 90% interest in the Cushing to Chicago
Pipeline System (CCPS) from BP Pipelines North America Inc. for
US$122 million. Subject to acceptance of proposed tolling
arrangements by Canadian producers and regulatory approval,
Enbridge intends to reverse the flow of the pipeline to transport
Canadian crude south from Chicago to Cushing.
Enbridge will acquire an interest in the existing 22/24-inch
diameter pipeline that runs 650 miles (1050 kilometres) from
Enbridge's main terminal in the Chicago area to the North
American crude oil hub at Cushing, Oklahoma, providing Canadian
crude oil producers and shippers with access to new markets south
of Chicago. Enbridge will propose integrated tolls from all
receipt points on its Canadian mainline through to all its
existing U.S. delivery points plus those accessible from CCPS,
including Cushing. Enbridge and BP will also cooperate to study
delivery options for Canadian crude extending beyond Cushing to
U.S. Gulf Coast markets.
CCPS has historically operated in south-to-north service with a
capacity of 300,000 barrels per day, and includes 4.3 million
barrels of tankage. Expenditures of approximately US$20 million
would be undertaken by Enbridge to reverse the line, which could
be completed by the end of 2004. BP will assist in the operation
of the line during the transition. Upon reversal, the line would
be renamed the Spearhead Pipeline, spearheading a number of
Enbridge initiatives to provide producers of crude oil from the
Alberta oil sands with access to new markets in the U.S.
If the necessary support to reverse CCPS is not obtained,
Enbridge and BP Pipelines will explore other options to maximize
the value of the system. Enbridge's investment would be limited
to US$57 million in this case, and BP Pipelines would be
entitled, for a period of nine months, to repurchase Enbridge's
90% interest at a $10 million discount.
"This proposal is a major next step forward on Enbridge's
strategy of creating value for our crude oil shippers by
providing access to new markets," said Enbridge President & Chief
Executive Officer Patrick D. Daniel. "Our Oil Sands Markets Study
indicates that refinery margins in the Cushing area will benefit
from running Canadian crude, and aggregate netbacks to Canadian
producers will benefit from market diversification. We are very
pleased to be able to make this option available at a fraction of
the cost of a new line. Assuming we complete this project in late
2004 it will be immediately accretive in 2005, with the potential
for further investment to reach additional markets thereafter.
The Spearhead Pipeline proposal has all of the win/win
ingredients which Enbridge favors in its customer relations, and
we're delighted to be teamed up with the pipeline arm of one of
the world's largest energy companies who we know as a strong
partner from a number of other ventures."
"We look forward to working with Enbridge to make this
opportunity available to shippers wishing to move Canadian crude
oil beyond Chicago to Cushing and possibly points further south,"
said James Lamanna, President of BP Pipelines North America. "The
Spearhead proposal, if accepted, provides BP with the ideal
combination of a favorable valuation for our CCPS asset and a
crude oil transportation path of potential strategic
significance."
Enbridge Inc. 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 in Ontario, Quebec, New Brunswick
and New York State. Enbridge employs approximately 4,000 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.
BP Pipelines North America is the second largest liquids pipeline
company in the U.S. transporting over 450 million barrel-miles of
oil, refined products, natural gas liquids, carbon dioxide, and
chemicals daily -- about 9% of the U.S. liquids pipeline market.
For more information about BP Pipelines North America, visit
When used in this news release, the words "anticipate", "expect",
"project", "believe", "estimate", "forecast" and similar
expressions are intended to identify forward-looking statements,
which include statements relating to pending and proposed
projects. Such statements are subject to certain risks,
uncertainties and assumptions pertaining to operating
performance, regulatory parameters, weather and economic
conditions and, in the case of pending and proposed projects,
risks relating to design and construction, regulatory processes,
obtaining financing and performance of other parties, including
partners, contractors and suppliers.
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