15-02-2013

Enbridge and Energy Transfer join to provide crude oil pipeline access to eastern gulf coast

Enbridge Inc and Energy Transfer announced today that they have entered into an agreement on the terms for the joint development of a project to provide crude oil pipeline access to the eastern Gulf Coast refinery market from the Patoka, Illinois hub.

The project will involve the conversion from natural gas service to crude oil service of certain segments of pipeline that are currently in operation as part of the natural gas system of Trunkline Gas Company, LLC, a subsidiary of Energy Transfer Partners, L.P. and Energy Transfer Equity, L.P. This agreement is subject to approval by the Federal Energy Regulatory Commission (FERC) of Trunkline's July 2012 request to abandon certain designated segments of pipeline from natural gas transmission service. The converted 30-inch diameter crude oil pipeline is expected to be in service by 2015. It will have capacity of up to 420,000 to 660,000 barrels per day (bpd) depending on crude slate and the level of subscriptions received in an open season to be conducted in the near future.

Enbridge and Energy Transfer would each own 50% of the joint venture entity. Enbridge's participation in the venture is subject to a minimum level of commitments being obtained in the open season, and on completion of due diligence.

Crude oil can reach the Patoka hub from both western Canada production and from the Bakken play in North Dakota through a variety of existing pipelines as well as through Enbridge's Southern Access Extension pipeline, which is already under development. The eastern Gulf Coast market is a highly attractive market for Canadian and Bakken crude, but is not currently accessible by pipeline. The Trunkline conversion would create the first pipeline transportation option for transportation of crude oil to the eastern Gulf Coast from the midwest U.S.

Once completed, the project will span more than 700 miles, including a new lateral from central Louisiana, near the town of Boyce, to the refining market and the crude oil hub at St. James, Louisiana. The St. James hub will provide access to refineries in the eastern Gulf Coast, as well as dock access for water-borne shipments.

"Connecting the Patoka hub to the St. James hub is an important component of our broader plans to open up access to the eastern Gulf Coast crude oil market and responds to significant interest from both producers and refineries," said Al Monaco, President and Chief Executive Officer, Enbridge. "Together with our western Gulf Coast Access program, which includes the expanded Seaway Pipeline, this new project would provide western Canadian and Bakken producers with access to the largest refining center in the world with approximately nine million bpd of crude oil processing capacity. The Gulf Coast market is ideally suited for both heavy and light crude oil.

"Over the last two years, we have committed $15 billion of new investments that will open new markets and help to address the significant price disparities facing western Canadian and Bakken producers, and to meet the demand of North American refiners. Across our three major market access programs currently underway, we're using existing infrastructure and rights-of-way to the greatest extent possible. We are pleased to partner with Energy Transfer in taking an innovative approach to using a currently underutilized asset to create cost effective and timely solutions for our customers and, importantly, minimize our environmental footprint and our impact on landowners and communities," Mr. Monaco added.

"This project will be another significant step toward our goal of optimizing the Energy Transfer asset base, while helping solve the critical logistics bottlenecks in North America by connecting enormous reserves of oil to the most attractive markets in the U.S., near St. James Louisiana," said Mackie McCrea, President and Chief Operating Officer of ETP. "Energy Transfer looks forward to developing this project with Enbridge and to establishing a key transportation conduit to link a diversified slate of reliable, long-term crude oil reserves to refineries along the eastern Gulf Coast, while increasing Energy Transfer's footprint in crude oil transportation."