* Eastern region has half of Gulf Coast refining capacity
* Company looking at new, existing infrastructure
* Plans could come together this year
By Jeffrey Jones
CALGARY, Alberta, Jan 24 Enbridge Inc
has started to sketch out plans for moving Canadian crude oil to
a U.S. refining market it has so far had little access to - the
eastern Gulf Coast region of Louisiana and Mississippi, its
chief executive said on Thursday.
Enbridge, the largest shipper of Canada's oil, has been a
main player in adding pipeline capacity to the western Gulf
Coast, most recently with the expansion of the Seaway pipeline
between the hub at Cushing, Oklahoma, and the Houston area.
That project has begun shrinking a glut of oil supplies in
the middle of the continent, where prices have been under
pressure compared with international crudes. With increasingly
tight capacity to move oil out of Alberta, Canadian crude has
been doubly discounted.
As more supplies of Canadian oil and North Dakota's Bakken
crude are shipped to Texas, refineries to the east represent the
next major potential market, Enbridge CEO Al Monaco said.
He offered few details to investors at a conference in
Whistler, British Columbia, however.
"I'm reluctant to really get into too much on that front,
but I think it's very clear, though, from the pricing
disparities that we saw that we need to get to those markets,
particularly the eastern Gulf," he said.
He pointed out that the Gulf Coast region has about 8
million barrels a day of refining capacity and that about half
of that capacity is on the eastern side, which comprises
Louisiana and Mississippi.
The company has already embarked on a series of projects
worth a total of C$6.4 billion ($6.4 billion) to move 800,000
barrels a day more Canadian crude to the Chicago area, through
its Spearhead line to Cushing and to Houston and Port Arthur,
Texas. The latter includes a 450,000 bpd expansion of Seaway by
Another market access plan would take light crude via a
series of pipeline expansions and extensions through the U.S.
Midwest and into Quebec at a cost of C$6.2 billion.
Besides the eastern Gulf, the company is looking at more
integration with railroads to get oil from its network to the
U.S. east coast and Atlantic Canada.
The moves are aimed at helping to erase the deep discount on
Canadian crude while major new projects, including Enbridge's
C$6 billion Northern Gateway pipeline between Alberta and the
Pacific Coast, wend their way through regulatory processes. If
approved, the contentious pipeline would not be in service until
Current tight export pipeline capacity is seen as one of the
main factors behind a Canadian heavy oil price that is currently
about half that of international benchmark Brent.
Monaco said there are a few options to get the oil to the
eastern Gulf Coast from its system, which currently moves more
than 2 million barrels a day.
"There are probably two or three ways that you could do
that, if you look at the pipeline grid as it sits today and what
you can do as far as building new or potentially using existing
infrastructure," he said. "There are a number of ways to do that
and we're working through what the best ways are."
It is possible that Enbridge could put such a plan in motion
sometime this year, Monaco said.