Enbridge Inc, Canada's largest pipeline operator, said on Tuesday it may have to build new pipeline capacity from its Superior, Wisconsin, storage hub if oil shipments from Canada and the Bakken shale field of North Dakota keep expanding.
Speaking at the company's annual investor day in Toronto, Guy Jarvis, head of the oil pipeline unit, said Enbridge could handle up to 500,000 more barrels per day (bpd) on its 2.5 million bpd system once it completes rebuilding its Line 3 pipeline from Alberta to Superior and finishes its Sandpiper pipeline serving the Bakken in 2017.
Canada currently produces about 3.5 million barrels per day and ships nearly 3 million to the United States.
According to industry forecasts, Canada's production will rise to nearly 5 million bpd by 2020. If growth in Canada or North Dakota is stronger than anticipated, Enbridge said it can accommodate the increased flows on its mainline system, which handles the lion's share of Canadian exports.
"If volumes available to the Mainline turn out to be stronger than anticipated, there's a potential for growth on our system of in excess of 500,000 barrels per day," Jarvis said.
To reach that capacity, the Sandpiper project from the Bakken oil field in North Dakota to the Mainline could be expanded by up to 160,000 bpd, while Line 3, which starts in Edmonton, Alberta, will have unused capacity into Superior of 370,000 bpd.
"While it is expected that these volumes can be accommodated on Sandpiper and Line 3 at very little cost, significant new investments would be needed downstream of Superior to eliminate the bottleneck that exists there," he added.
Jarvis said the Calgary-based pipeline operator would need twin its Southern Access pipeline, also known as Line 61, to clear the bottleneck and move additional volumes to the Midwest hub of Flanagan, Illinois.
Depending on volume growth, Enbridge could also consider a new line to the eastern U.S. Gulf Coast, though no plans are imminent. The company had previously contemplated a pipeline from Patoka, Illinois, to Louisiana.
Shares of Enbridge closed down 20 cents at C$53.61 on the Toronto Stock Exchange, in line with a broad decline among energy companies.
Earlier on Tuesday, the company quietly pushed back the completion of its Sandpiper expansion project by a year to 2017, citing permitting delays in Minnesota. Marathon Oil holds a 27 percent stake in the project and is its main shipper.
Enbridge also said it would not make a final investment decision on its controversial Northern Gateway pipeline, which would ship Alberta crude to a deepwater port in northern British Columbia for export of international markets, until 2015.
The company set out a record C$44 billion ($39.3 billion) capital growth program for the next five years, which includes C$11 billion worth of new projects, including the C$7.5 billion Line 3 replacement announced earlier this year.