* Cushing-to-Gulf oil pipeline winning shipper interest
* $2 bln line could be in service by mid-2013
* Enbridge able to handle much of Keystone XL volumes
By Scott Haggett
CALGARY, Alberta, Nov 9 Enbridge Inc
said on Wednesday it will likely proceed with its 800,000
barrel per day Wrangler pipeline from the Cushing storage hub
in Oklahoma to Gulf of Mexico refineries as the U.S. State
Department raised the threat of a lengthy delay in TransCanada
Corp's Keystone XL pipeline.
Pat Daniel, Enbridge's chief executive, said his company
and partner Enterprise Product Partners have received
strong interest from would-be shippers on the line.
While Enbridge is still discussing terms and conditions
with shippers, it said there is enough interest for both
Wrangler and an expansion of its line from Flanagan, Illinois,
to Cushing, to proceed.
"We expect to conclude those discussions with sufficient
volumes to proceed with both segments of the line," Daniel said
on a conference call.
The $2 billion Wrangler line could be in service by the
middle of 2013, offering relief to bloated storage levels at
the Cushing hub, the pricing point for the benchmark West Texas
Intermediate crude contract on the New York Mercantile
Canada is the largest oil exporter to the United States and
rising shipments from the oil sands are a key reason why
Cushing is overstocked.
TransCanada's controversial Keystone XL pipeline, which
would take some crude from Cushing to Gulf of Mexico
refineries, was expected to offer the earliest relief to
Cushing and narrow a near $20 per barrel discount between WTI
and the European Brent standard.
However, officials at the U.S. State Department, which is
overseeing the approval process for the line because it crosses
the Canada-U.S. border, said on Wednesday that it was
considering making TransCanada examine new routes to avoid
environmentally sensitive areas, a move that could delay
approvals by 12 to 18 months.
TransCanada has said that delays had the potential to kill
the project if U.S. refiners are forced to find more timely
alternatives to the Canadian crude Keystone would have
Daniel said that Enbridge, whose lines already carry the
bulk of Canadian crude oil sent to the United States, has
enough capacity on its system to handle much of the oil that
would have flowed on Keystone XL, though Enbridge's lines
between Superior, Wisconsin, and the Chicago region could
become a potential bottleneck.
"We do have sufficient capacity available, and/or
relatively low-cost expansions, to be able to accommodate most
of, at least the early volumes, of what would have moved on
Keystone XL," Daniel said.
However, a Canadian oil industry official said Keystone XL
remains the best option for moving large volumes of oil
sands-derived crude to the Gulf Coast.
Wrangler would help alleviate the Cushing bottleneck for
all crude sources, including Canadian oil, said Greg Stringham,
vice-president of the Canadian Association of Petroleum
"But it does not give that direct connection from the
Canadian supply to the largest refining center in North
America, in the Gulf Coast," Stringham said.
The Keystone XL project has been bitterly opposed by
environmentalists concerned about rising greenhouse gas
emissions from development of northern Alberta's vast oil
As well, the Nebraska state legislature is holding a
special sitting to draft a law that would force TransCanada to
move the line's route away from the state's sensitive Sand
Hills region and the Ogallala aquifer.
Daniel said Enbridge was unlikely to face similar
opposition since the company could expand capacity in existing
rights-of-way instead of breaking new ground.
Enbridge shares fell 34 Canadian cents to C$35.01 on the
Toronto Stock Exchange, amid a broad selloff on markets.