Enbridge Needs To Write the President a Huge Thank You Letter -- Maybe a Campaign Contribution

Enbridge to build two new pipelines

One parallels the existing Seaway pipeline, Cushing to the Gulf

The second will connect Illinois with Cushing 
Net capacity leaving Cushing: minimal change

 Updates

March 28, 2012: Seaway reversal and parallel pipeline -- takeaway 850,000 bopd; but expansion of Illinois-to-Cushing South Flanagan project reduces that.  Net change -- net capacity of ONLY 75,000 bopd OUT of Cushing.

The Seaway pipeline will carry 850,000 barrels of oil a day away from Cushing by 2014, owners Enbridge Inc. and Enterprise Products Partners LP announced this week.

But that project will be offset by plans to expand the capacity of Enbridge's Flanagan South Project.
Mike McDonald, co-owner of Oklahoma City's Triad Energy Inc., said expanding the Flanagan South Project will add a net capacity of 75,000 barrels a day out of Cushing.

“It's not going to help us a bunch,” said McDonald, former chairman of the Oklahoma Independent Petroleum Association.

So it goes. Thank goodness the president stands his ground and continues to slow-roll the industry. We simply can't keep up with the Bakken and drilling in other unconventional shale on non-Federal land.

Original Post

[This is a huge story: the "double Seaway oil pipeline" is one of five headline stories on the Yahoo!Finance front page Tuesday evening. It will be there for several hours, perhaps into tomorrow. Since it parallels an existing pipeline, I would assume that it will be permitted a lot more quickly than the southern portion of the Keystone XL. This is quite incredible.)

The story is a bit confusing for me to read, especially in light of so many pipeline announcements, it is hard to keep track of what is new, what is old. But this story comes on top of the Texas Express NGL pipeline mentioned yesterday involving Enbridge, Enterprise, and Anadarko.

This story is particularly confusing for a couple of reasons. First, there appear to be two stories, and second, the method of expansion is not explained until later in the article. But if I read the story correctly, these are the three takeaways:

1. Enbridge is on track to reverse the oil flow in the Seaway from Cushing to the Gulf later this summer, and thereby help relieve the congestion of all the Bakken oil ending up at Cushing, as well as oil from Gulf ports, and Canadian oil. Initially, the reversal will provide capacity of 150,000 bopd from Cushing to the coast, and that will rise to 400,000 bopd by 2013 when additional pumps are installed.

2. Enbridge and Enterprise will add a 512-mile pipeline parallel to the current Seaway pipeline by mid-2014. This will add 450,000 bopd. [Comment: that will just barely handle the new Bakken oil production projected by then.]

3. Enbridge will build a new pipeline -- the Flanagan South project -- linking Illinois with Cushing. The Flanagan South Pipeline from Flanagan, Illinois to Cushing, Oklahoma will be upsized to a 36- inch diameter line with an initial capacity of 585,000 barrels per day (bopd).

Meanwhile, the Keystone XL dithers. Enbridge needs to send the President, the Sierra Club, Warren Buffett, et al, a huge thank you letter.

For investors, company, P/E, and yield:

• ENB: 30, 3%; approaching 52-week high
• EPD:  21, 5%; near it's 52-week high
• EEP: 16, 7%, in a trading range

By the way: think of the number of jobs this will produce: building two new pipelines, adding additional pumps to existing pipeline. It's almost criminal to think of $1 trillion in federal government that resulted in "no" new jobs. At least that's my myth. And I don't think I'm too far off the mark. Again, some numbers rounded.