Enbridge Inc. will build a $475-million pipeline and terminal for a new Husky oil sands
The company will build a series of smaller new pipelines to service new crude production from the oil sands and the Bakken, a fast-growing oil play that straddles the border between Saskatchewan and Montana.
Expansion in the Bakken will cost roughly $550-million. In the oil sands, the company will also build a $400-million expansion of its Waupisoo line, a $370-million addition to its Wood Buffalo line and a $185-million capacity increase to its Athabasca line.
The work will deliver increased crude output expected from projects owned by a Husky-BP PLC partnership, Suncor Energy Inc. and Cenovus Energy Inc.
“What it comes down to is that Enbridge is the largest operator of regional crude oil pipelines that serve the oil sands, and we’re in a very good position for growth,” Enbridge spokeswoman Gina Jordan said.
The raft of announcements come as the oil sands stage a resurgence driven by stronger crude prices and greater confidence in capital markets.
“We knew that a lot of these projects that were put on the back burner would be coming back to the surface,” said Lanny Pendill, an analyst with Edward Jones.
“So none of this is really a surprise. When oil is trading where it’s at now, these projects are economic and the oil sands continue to be viewed as one of the few places in the world where there’s still an abundant resource.”
The new work, which saw Enbridge win out against competitor firms like Inter Pipeline Fund and Pembina Pipeline Income Fund, may help Enbridge maintain a 10-per-cent annual growth rate for several years past 2012, said Carl Kirst, an analyst with BMO Nesbitt Burns.
“Even if they were the person in the pole position, it’s nice to see them capturing new deals and, to bring it down to brass tacks, extending their growth rate,” Mr. Kirst said.
The spate of new projects also show that the company’s reputation with industry has not been unduly hurt by a pipeline rupture in Michigan. That accident that made the company the focus of substantial negative attention as oil leaked into an important river system.
Much of the spill has now been cleaned up, and, Mr. Kirst said, “the totality of the Enbridge brand is still very strong.”