November 25, 2013 / 10:40 PM / 6 years ago

Marathon agrees to partner on Enbridge's Sandpiper line

CALGARY, Alberta, Nov 25 (Reuters) - Enbridge Inc said on Monday that Marathon Petroleum Corp agreed to take a stake and become the main shipper on the company’s $2.6 billion Sandpiper pipeline project, which will take crude oil from North Dakota’s Bakken field to U.S. refiners.

Enbridge, Canada’s largest pipeline company, said in a release that Marathon will pay 37.5 percent of Sandpiper’s cost in exchange for a 27 percent interest in the company’s North Dakota system.

Sandpiper will add a new, 225,000 barrel per day line, running from Beaver Lodge, North Dakota to Clearbrook, Minnesota, and a 375,000 bpd line from Clearbrook to Superior, Wisconsin, where it will meet Enbridge’s massive mainline system, which carries the bulk of Canada’s crude exports to Midwest refiners.

When complete in 2016, Sandpiper will boost the capacity of Enbridge’s North Dakota pipeline network to 580,000 bpd, as the company looks to accommodate rising oil production from the state.

“With the growth in Bakken crude oil production, the Sandpiper Project will provide needed pipeline takeaway capacity for crude oil transportation out of the region,” Mike Palmer, Marathon’s senior vice president, Supply, Distribution and Planning, said in a release. “This project further strengthens our ability to transport Bakken crude oil by pipelines and benefits MPC by providing additional access to this resource at a competitive cost of transportation.”

The announcement comes eight months after Enbridge was forced to revamp its plans for the line. The U.S. Federal Energy Regulatory Commission (FERC) rejected the company’s initial proposal in March after refiners complained about planned surcharges for moving oil on the conduit.

Under its original proposal, pipeline was to be open to all shippers, but it now plans to turn Sandpiper into a contract line, with only a small amount of capacity open for spot shipments.

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