Operations

The expansion of pipeline capacity to the U.S. Midwest has contributed to a narrowing of heavy oil differentials. In 2010, two significant pipeline projects were completed: the Alberta Clipper and Keystone pipelines. The Alberta Clipper pipeline is a crude oil pipeline that provides service between Hardisty, Alberta, and Superior, Wisconsin. Initial capacity is 450,000 bbl/d. The first phase of the Keystone pipeline system is a bullet line that transports crude oil from Canada to market hubs in the U.S. Midwest. Initial pipeline capacity on Keystone was approximately 435,000 bbl/d, then increased to 591,000 bbl/d in February 2011 upon completion of the pipeline expansion to Cushing, Oklahoma. Beyond these two projects, the proposed Keystone Gulf Coast Expansion Project (“Keystone XL”) would transport additional Canadian crude oil to the U.S. Gulf coast and bring total Keystone pipeline capacity to 1.1 million barrels per day.

A U.S. government delay in the decision to grant approval of Keystone XL until the first quarter of 2013 suggests that this additional capacity would not be available until at least 2015. In the interim however, an Enbridge-Enterprise Energy partnership has stepped up plans to increase crude transport capacity to the U.S. Gulf Coast, potentially earlier than TransCanada's Keystone XL. This partnership has announced plans to reverse the Seaway Pipeline from Cushing in 2012, followed by new pipeline additions to carry crude from the Chicago area to Cushing, and from Cushing to the U.S. Gulf Coast via a twinning of Seaway or another new pipeline. Proposed capacity addition from this Enbridge-Enterprise system is 800,000 barrels per day to the U.S. Gulf Coast (Houston & Port Arthur areas), with projected in-service timing of mid-2013.

Further to the announced plans to increase piepline capacity to the U.S. Gulf Coast, Enbridge is also planning to expand crude transport capabiltiy to the Canadian Pacific Coast, for transport to Asian markets via their Northern Gateway pipeline project. Enbridge's current timeline calls for an in-service date sometime in 2016, assuming regulatory approval in 2012 and construction commencing in 2013. This proposed pipeline would have a capacity of 525,000 barrels per day. Together with industry plans to provide increased access for Canadian crude to the major U.S. Gulf refining complex, this western-bound pipe would ensure outlets and value for Canada's western crude oil exports.