Enbridge Inc on Monday said it will partner with privately held Canopy Prospecting Inc. to develop rail facilities that will deliver 80,000 barrels per day of crude oil from the Bakken shale prospect in North Dakota to Philadelphia refineries by the third-quarter of 2013.

The $68-million project will upgrade existing tracks to accommodate 120-car trains, lease a power generation facility, refurbish a 200,000-barrel tank and work on Philadelphia-area pipelines to deliver the crude, the company said.

The rail capacity can be expanded to 160,000 bpd by mid 2014, which can then be transported by barge and pipeline to nearby refineries.

Enbridge will own 75 percent of the joint-venture project called Eddystone Rail Company and operate the facilities.

The project comes on the heels of massive changes in the East Coast refining business, where nearly one-fourth of the capacity was closed in the last two years because of high costs and declining profits.

Deals made earlier this year brought two major plants back from the brink of closure as oil companies eyed cheap light-sweet crude from U.S. shale prospects and Canadian oil sands.

Sunoco Inc partnered with private-equity firm Carlyle Group to save the 335,000 bpd refinery in Philadelphia and Delta Air Lines Inc subsidiary, Monroe Energy, bought the 185,000 bpd Trainer refinery in Pennsylvania to process jet fuel.

Crude oil output in North Dakota’s Bakken shale prospect has doubled since June 2011 to reach a record high just over 660,000 barrels per day in September. An increasing share of this crude oil is shipped on rail cars to markets on the East, West and Gulf coasts as pipeline additions fail to catch up with the fast rate of growth in output.

Enbridge is expanding its pipeline system in North Dakota to ship up to 475,000 bpd of crude from the Bakken by early 2013.
Source: Financial Post
© Thomson Reuters 2012

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