Enbridge Inc.

Enbridge Inc.

December 06, 2012 16:19 ET

Enbridge to Invest $6.2 Billion in Light Oil Market Access Program

CALGARY, ALBERTA--(Marketwire - Dec. 6, 2012) - Enbridge Inc. (TSX:ENB) (NYSE:ENB), announced today that it has received shipper support to proceed with a $6.2 billion program to expand access to markets for growing volumes of North Dakota and western Canada light oil production. The Light Oil Market Access Program (the Program) will provide increased pipeline capacity on Enbridge's North Dakota regional system; further expand capacity on the U.S. mainline system; enhance Canadian mainline terminal capability; upsize the Eastern Access Program and provide additional access to U.S. Midwestern refineries. The Program will provide access from the Enbridge system to attractive refinery markets in Ontario, Quebec and the U.S. Midwest for an additional 400,000 barrels per day (bpd) of light oil.

The Program includes a number of individual projects that will be undertaken by Enbridge subsidiaries or affiliates including Enbridge Energy Partners, L.P. ("Enbridge Partners" or "the Partnership") (NYSE:EEP). Funding of the Program will be shared between Enbridge and the Partnership through arrangements intended to enable Enbridge Partners to benefit from a significant investment opportunity within the limits of its funding capability. The Partnership's investment in the $6.2 billion Program is expected to be approximately $3.4 billion.

"This $6.2 billion investment rounds out our suite of major crude oil new market access initiatives for North American markets," said Al Monaco, President and Chief Executive Officer, Enbridge Inc. "It follows on the heels of our $2.7 billion Eastern Access Program announced in May, and our $5.8 billion upsized U.S. Gulf Coast Access Program announced in March, including a number of projects adding capacity to the existing mainline system announced in May. These market access initiatives reflect changing North American supply and demand fundamentals and will create significant value for our customers. This latest investment meets the same stringent criteria applicable to all Enbridge growth projects."

The Light Oil Market Access Program responds to significant recent developments with respect to supply of light oil from U.S. north central formations and western Canada, as well as refinery demand in the U.S. Midwest and eastern Canada. On the supply side, production from the Bakken formation centered in North Dakota has grown from 200,000 bpd to 700,000 bpd in the last five years with potential to expand to 1,200,000 bpd or more in the next five years, if transportation access to refinery markets is available. Additional growth in light crude production of 100,000 bpd or more is also anticipated from the application of the latest recovery technologies to the Cardium and Viking formations in Alberta, Canada. Supply from these areas has become increasingly attractive to refineries in the U.S. Midwest and eastern Canada compared to much more costly alternative sources.

The individual projects within the Program are targeted to be available for service at varying dates from 2014 to early 2016. Shippers have provided support for each of the individual projects either in the form of capacity commitments or support for the regulatory approval and commercial framework of the North Dakota and Mainline system projects, including support for the regulatory approval of the North Dakota expansion commercial terms pending before the Federal Energy Regulatory Committee (FERC). The terms approved by shippers for the U.S. mainline system expansion projects include surcharges to be added to Enbridge's Competitive Tolling Settlement (CTS) international joint toll. The Program will require various regulatory approvals and permits.

"We stand now with a total of $26 billion of commercially secured attractive growth investments, which are planned to be in service between 2012 and 2016, providing us with confidence that we will achieve an average annual growth rate in earnings per share exceeding 10% through that year," said Mr. Monaco. "With a commercial model for much of this capital, which provides increasing returns over time, we are also on track to extend our industry-leading growth rate beyond 2016.

"Effective execution of this growth program is a critical priority and we are well positioned with the required human and financial resources. Our Major Projects department remains on schedule and on budget for substantially all projects currently under development. On an enterprise-wide basis, we have raised more than $6 billion of capital markets funding to date in 2012, and have expanded our general purpose bank credit facilities to more than $12 billion."

Enbridge is well underway in stakeholder consultations for some of these projects and will soon begin consulting with landowners and other stakeholders on other projects in earlier stages of planning. "Our highest priority remains the safe, reliable and environmentally responsible construction and operation of our energy infrastructure assets, and our team remains focused on implementing our Operational Risk Management Plan and demonstrating an industry-leading standard of operating performance," said Mr. Monaco.

Light Oil Market Access Projects
Project Estimated Cost In Service Target Funding
North Dakota System Expansion and Extension
Sandpiper Project US$2.5 billion early 2016 EEP
Southern Access Extension US$0.8 billion early 2015 ENB
Eastern Access Upsize
Line 9 Capacity Expansion C$0.1 billion mid-2014 ENB
Line 6B capacity expansion US$0.4 billion early 2016 Joint (ENB/EEP)
U.S. Mainline System Capacity Expansions
Chicago Area Connectivity (Line 62 Twin Flanagan to Griffith) US$0.5 billion mid-2015 Joint (ENB/EEP)
Superior to Flanagan (Line 61 capacity expansion) US$1.3 billion mid-2015 / early 2016 Joint (ENB/EEP)
Canadian Mainline System
Terminal Flexibility and Connectivity C$0.6 billion mid-2015/early 2016 ENB

Conference Call

Enbridge Inc. will host a webcast conference call to discuss its 2013 Guidance as well as the Light Oil Market Access Program as follows:

Webcast Information

Event: Enbridge Inc. 2013 Guidance Conference Call

Date: Thursday, December 6, 2012

Time: 2:30 p.m. Mountain Time / 4:30 p.m. Eastern Time

Webcast Registration: sign-up

Conference Call Information

Dial-in #'s (Audio only - please dial in 10 minutes ahead if not pre-registered)

North America: 1-888-713-4213

Outside North America: +617-213-4865

Participant Passcode: 33022607

Pre-Registration for Conference Call

For participants wishing to pre-register for the conference call, please click on this link.

Pre-registration is not mandatory, but is recommended as it provides immediate entry into the call and facilitates the timely start of the conference. Once pre-registration is completed you will receive online confirmation with a passcode and PIN. This information should be noted or copied into your calendar as you will be prompted for this information when dialing in on the day of the event.

About Enbridge Inc.

Enbridge Inc. is a North American leader in delivering energy and one of the Global 100 Most Sustainable Corporations. 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 a significant and growing involvement in natural gas gathering, transmission and midstream businesses, and an increasing involvement in power transmission. 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. As a generator of energy, Enbridge has interests in close to 1,000 megawatts of renewable and alternative energy generating capacity and is expanding its interests in wind and solar energy, geothermal and hybrid fuel cells. Enbridge employs more than 10,000 people, primarily in Canada and the U.S. and is ranked as one of Canada's Greenest Employers and one of Canada's Top 100 Employers for 2013. Enbridge is included on the 2012/2013 Dow Jones Sustainability World Index and the Dow Jones Sustainability North America Index and is also a constituent of the 2012/2013 FTSE4Good Index Series. Enbridge's common shares trade on the Toronto and New York stock exchanges under the symbol ENB. For more information, visit www.enbridge.com.

About Enbridge Energy Partners, L.P.

Enbridge Energy Partners, L.P. (www.enbridgepartners.com) owns and operates a diversified portfolio of crude oil and natural gas transportation systems in the United States. Its principal crude oil system is the largest transporter of growing oil production from western Canada. The system's deliveries to refining centers and connected carriers in the United States account for approximately 15 percent of total U.S. oil imports; while deliveries to Ontario, Canada satisfy approximately 70 percent of refinery demand in that region. The Partnership's natural gas gathering, treating, processing and transmission assets, which are principally located onshore in the active U.S. Mid-Continent and Gulf Coast area, deliver approximately 2.5 billion cubic feet of natural gas daily. Enbridge Energy Partners is ranked as one of the 100 Most Trustworthy Companies in America.

Enbridge Energy Management, L.L.C. (www.enbridgemanagement.com) manages the business and affairs of the Partnership and its sole asset is an approximate 13 percent interest in the Partnership. Enbridge Energy Company, Inc., an indirect wholly owned subsidiary of Enbridge Inc. of Calgary, Alberta, (NYSE:ENB) (TSX:ENB) (www.enbridge.com) is the general partner and holds an approximate 22 percent interest in the Partnership.

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 and its affiliate EEP believe that these statements are based on information and assumptions which 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 the Canadian securities filings for ENB, and American SEC filings for ENB and EEP. While Enbridge and EEP make 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. Except as may be required by applicable securities laws, Enbridge and EEP assume 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.

Enbridge Light Oil Market Access Program

Background Information

Enbridge's Light Oil Market Access Program (the Program) will provide increased pipeline capacity on Enbridge's North Dakota regional system; further expand capacity on the U.S. mainline system between Superior, Wisconsin and the Chicago area; add capacity to the Eastern Access Program; enhance Canadian mainline terminal capability and provide additional access to U.S. Midwestern refineries. Together, these projects will provide access to attractive markets in Ontario, Quebec and the U.S. Midwest for an additional 400,000 barrels per day (bpd) of light oil.

North Dakota System Expansion/Extension (Sandpiper Project)

The Bakken takeaway capacity of the Partnership's North Dakota System will be expanded by 225,000 bpd to a total of 580,000 bpd, with a target in service date of early 2016. The expansion will involve construction of an approximately 965-kilometre (600-mile) 24-inch diameter line from Beaver Lodge, North Dakota to the Superior, Wisconsin Terminal. The new line will twin the 210,000 bpd existing North Dakota System mainline, which now terminates at Clearbrook Terminal in Minnesota, adding 225,000 bpd of capacity on the twin line between Beaver Lodge and Clearbrook and 375,000 bpd capacity between clearbrook and Superior.

The estimated capital cost of this project is approximately $2.5 billion. The capital cost will be rolled into the existing North Dakota System rate base, with the associated cost of service to be recovered in tolls. The Sandpiper Project's commercial terms remain subject to approval by FERC as filed in the Petition for Declaratory Order filed with FERC on November 2, 2012. The commercial terms filed with FERC have support from numerous shippers and stakeholders on the North Dakota System. EEP will fully fund the Sandpiper Project.

Eastern Access Upsize

On May 16, 2012, Enbridge announced that it had secured sufficient commercial support to proceed with additional aspects of its $2.7 billion Eastern Access Program, including full reversal of its Line 9 to provide crude oil supply from the Bakken and western Canada to refineries in both Ontario and Quebec. An open season process was subsequently held and additional commitments were received that will require an additional 80,000 bpd of delivery capacity within Ontario and Quebec at a cost of approximately $0.1 billion. This will bring the total investment within Ontario and Quebec to $0.5 billion including the reversal.

The Eastern Access Program also includes supporting U.S. mainline system expansions between Griffith, Indiana, and the border near Sarnia, Ontario, which will require upsizing at an estimated cost of approximately $0.4 billion. This brings the estimated total cost of the Eastern Access supporting mainline expansions to $2.6 billion. The upsized capacity and cost is supported by the Canadian Association of Petroleum Producers (CAPP), representing Enbridge's mainline shippers, for inclusion in the U.S. mainline system cost of service surcharge mechanism. The additional cost will be included in the Eastern Access Joint Funding Arrangement pursuant to which Enbridge will fund 60% of the cost and EEP will fund 40%, with an option to pare down by up to 15% and to claw back up to 15%.

The upsized Line 9 reversal and supporting U.S. mainline expansion capital brings the total Eastern Access Program estimated cost to $3.2 billion including the $0.2 billion Toledo Pipeline expansion.

Southern Access Extension Pipeline

Enbridge will construct the 265-kilometre (165-mile), 24-inch diameter Southern Access Extension Pipeline from Flanagan to Patoka, Illinois at an estimated cost of approximately $0.8 billion, and a target in service date of first quarter 2015. The initial capacity of the line will be 300,000 bpd. Marathon Petroleum Company L.P. (Marathon Petroleum) has contracted capacity on the pipeline in order to access light crude oil supply off the Enbridge mainline for its PADD II refineries.

The terms of the Marathon Petroleum contract provide sufficient commercial support to the project, but an open season will be held to provide other potential shippers with an opportunity to secure capacity. The capacity of the pipeline could be increased through additional horsepower, and/or upsized to 30inch diameter if substantial further commitments were received. Marathon Petroleum will have an option to take up to a 25% interest in the pipeline.

U.S. Mainline System

Based on increased availability of western light oil supplies, and attractive pricing relative to U.S. Gulf Coast sourced supply, Chicago area refineries are shifting to western Canada and North Dakota as their primary light oil supply source. To accommodate this additional demand, as well as the additional Ontario and Quebec demand, the capacity of the Lakehead System between Flanagan, Illinois and Griffith, Indiana will be expanded by constructing a 122-kilometre (76-mile), up to 36-inch diameter twin of the existing Line 62. The new line will have initial capacity of 570,000 bpd at an estimated cost of approximately $0.5 billion, and a target in service date of mid-2015. The capacity of the 42-inch diameter Line 61 from Superior to Flanagan will also be expanded to its full 1,200,000 bpd potential, together with related terminal modifications, at an estimated additional cost of approximately $1.3 billion, with a target in service date of mid-2015.

These projects will be jointly funded by Enbridge and the Partnership, under the terms of a Mainline Expansion Joint Funding Arrangement, paralleling the Eastern Access Joint Funding Arrangement.

CAPP has approved inclusion of this additional mainline expansion capital in the Lakehead System local toll cost-of-service surcharge mechanism.

Canadian Mainline System Terminal Flexibility and Connectivity

In order to accommodate additional light oil volumes and enhance the operational flexibility of the Canadian mainline terminals, an upsized expansion program will be undertaken at an estimated cost of approximately $0.6 billion., The Representative Shipper Group (RSG), established under the terms of the mainline CTS, has approved surcharges on the international joint toll provided for in the CTS which are applicable to all mainline shipments which originate from western Canada and are delivered to points east of Superior, Wisconsin. A surcharge of $0.05 will apply to all such shipments delivered to Flanagan and a surcharge of $0.12 to all other such shipments.

Contact Information