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UPDATE 4-Enbridge, Enterprise plan biggest Cushing-Gulf line
September 29, 2011 / 1:10 PM / 6 years ago

UPDATE 4-Enbridge, Enterprise plan biggest Cushing-Gulf line

   * Enterprise, Enbridge plan 800,000 bpd Wrangler Pipeline
 * Line to run from Cushing to Houston, on to Port Arthur
 * Enterprise says has received strong shipper interest
 * Open season begins Oct 3; aims to start service mid-2013
(Adds details, updates stock quotes)
 By Jonathan Leff and Jeffrey Jones
 Sept 29 (Reuters) - Enterprise Products Partners (EPD.N) and erstwhile rival Enbridge Inc (ENB.TO) have joined forces to reenter the race to ship oil to the U.S. Gulf Coast from the oversupplied Midwest with plans for the most ambitious pipeline in the region yet.
 The companies said on Thursday they plan to build an 800,000 barrel per day pipeline, called Wrangler, to the Houston and Port Arthur refining hubs from Cushing, Oklahoma, for about $1.5 billion to $2 billion. Both have scrapped separate projects over the past two months.
 The line, to start up in mid-2013 pending regulatory approvals and sufficient customer commitments, would be the largest of a series of planned lines that will help Canadian and U.S. producers get their crude to the premium Gulf Coast market, easing a glut of oil that has depressed prices in the midcontinental United States. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 FACTBOX on pipeline projects: [ID:nN1E77F19G]
 FACTBOX on Cushing storage:   [ID:nN07199185] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 Enterprise had floated a 400,000 bpd line with Energy Transfer (ETP.N) called “Double E”, but failed to secure enough customers. Enbridge said on Thursday that the Wrangler line takes the place of its 350,000 bpd Monarch proposal.
 Wrangler stands better odds of proceeding, analysts said. The new line is larger, takes advantage of Enbridge’s leading position as an operator of Cushing oil storage, extends further along the coast and provides more flexibility in the types of crude that can be shipped.
 “If I were to look at both Double E and Wrangler lines, I’d say this line has a better chance of success,” said Matthew Partridge, senior downstream analyst at Wood Mackenzie in Houston. “They have Enbridge on board and shippers will see that credibility. Enbridge has a lot of experience navigating the permitting process and the political aspects.”
 Wrangler would extend 500 miles (800 km) to Enterprise’s ECHO storage terminal in Harris County, Texas, serving refineries in Texas City, Pasadena-Deer Park, Baytown and along the Houston Ship Channel. It is designed to be expanded to accommodate surging Canadian and U.S. oil production.
 “We’ve already had strong interest from shippers looking for longer-term commitments,” Rick Rainey, spokesman for Enterprise, said.
 The partners believe the project will be viable, even if TransCanada Corp’s (TRP.TO) Keystone XL project, which would also drain off 500,000 bpd of crude at Cushing, proceeds, said Jennifer Varey, spokeswoman for Enbridge, the largest transporter of Canadian crude exports to the United States.
 “The Wrangler Pipeline provides some different options to shippers from Cushing to pipeline interconnections near Houston,” she said. “With the supply shift and supply sources in the Midcontinent area, there’s a need for many competitive infrastructure projects, especially out of Cushing.”
 The greater long-term use of the Wrangler pipeline may be to deliver rising volumes of crude from such emerging shale regions as the Bakken in North Dakota and Niobrara in the Rocky Mountain states to Gulf refineries, UBS analyst Chad Friess said in a note to clients.
 A month-long open season, a period in which the partners will seek commitments for space on the line, starts Oct. 3. Enbridge said it will also seek shipper interest in moving oil to the Gulf Coast from the Chicago area, using Wrangler capacity.
 Enbridge shares were off 17 Canadian cents at C$32.75 on the Toronto Stock Exchange. Enterprise shares rose 21 cents to $40.71 in New York.
 ($1=$1.03 Canadian)  (Reporting by Jonathan Leff in New York and Jeffrey Jones in Calgary. Additional reporting by Selam Gebrekidan and Matthew Robinson; editing by Jim Marshall and Marguerita Choy)   

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