Canadian Manufacturing

Marathon named anchor shipper for part of $6.2B Enbridge project

$2.6-billion Sandpiper project in U.S. Midwest part of Enbridge's larger Light Oil Market Access program

CALGARY and HOUSTON—Enbridge Inc. and its affiliate in the United States announced Marathon Petroleum Corp. has signed on as anchor shipper for a portion of a $6.2-billion project that aims to bring more oil from Canada and North Dakota to market.

According to Enbridge and Enbridge Energy Partners, L.P., Marathon has put pen to paper on a deal that will see it anchor the proposed $2.6-billion Sandpiper project, a 980-kilometre interstate pipeline that would run from near Tioga, N.D., to a terminal in Superior, Wis.

The project would expand Enbridge’s system of pipelines in North Dakota by 225,000 barrels per day (BPD) to a total of 580,000 bpd of crude from the state’s Bakken formation.

Enbridge said the Sandpiper line would twin an existing 210,000 bpd line, minimizing environmental impacts by using the same corridor to bring more oil from that region to markets in the U.S. and Canada.

“The Sandpiper project provides much needed pipeline capacity to enable rapidly growing Bakken crude oil production,” Enbridge president of liquids pipelines and major projects Stephen J. Wuori said in a statement.

“(Marathon’s) shipping commitment demonstrates the economic attractiveness of establishing a low-cost reliable pipeline solution for Bakken producers to access the premium North American markets for light crude oil.”

Under their agreement, Enbridge said Marathon would fund 37.5 per cent of the Sandpiper project—roughly $975-million—in exchange for an approximate 27 per cent equity interest in the entire North Dakota system.

The Sandpiper project is part of a larger $6.2-billion series of ventures the energy firm is looking to undertake in both the U.S. and Canada.

Announced in December 2012, the Light Oil Market Access (LOMA) program is made up of several projects that would collectively bring an additional 400,000 bpd of light crude from western Canada and North Dakota to markets in eastern Canada and the U.S. Midwest.

In addition to the Sandpiper project, the LOMA program includes the 300,000 bpd Southern Access Extension pipeline from Flanagan to Patoka, Ill.; an 80,000 bpd upsize of the Line 9 reversal project to move crude oil from Sarnia, Ont., to refineries in Ontario and Quebec; and “enhancements to the flexibility of Enbridge’s mainline in western Canada.”

Those projects would all be funded by the Calgary-based Enbridge, while another component of the LOMA program in the U.S.—the Eastern Access program mainline expansion project between Griffith, Ind., and Sarnia, would be jointly funded by Enbridge and American affiliate Enbridge Energy Partners.

The Sandpiper line would now be jointly funded by Enbridge Energy Partners and Marathon.

The former will now hold an open season for further prospective shippers to get on board with the project.

According to Enbridge, that line has a target completion date of early 2016.

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