Enbridge to Flow Oil From Midwest to Eastern Gulf Coast -- A First -- Keystone XL Replacement/Alternative

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.   -- MSN Money (see below)

Reuters is reporting that Enbridge in a joint venture with Energy Transfer Partners will flow crude oil from the midwest to the eastern Gulf Coast.

Energy Transfer Partners LP plans to convert parts of a gas pipeline to carry crude oil under a joint venture with Enbridge Inc, helping move soaring supplies from Canada and North Dakota to refineries in the eastern Gulf Coast.

The pipeline, expected to be in service by 2015, will be the first to transport crude oil from the U.S. Midwest to the eastern Gulf Coast, the companies said in a statement on Friday.

A unit of Energy Transfer currently owns the gas pipeline, which will be able to carry between 420,000 and 660,000 barrels of oil per day from the storage and blending hub of Patoka, Illinois. Patoka is connected to western Canada and North Dakota's Bakken shale field through a network of existing oil pipelines.

Wasn't there just a story that Enbridge pipelines out of North Dakota were being under-subscribed due to rail?  If accurate, maybe just a regional thing. Despite the surge in CBR, something tells me "pipeline" is not dead.

Additional information from MSN Money:

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. 

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.

With regard to the Keystone XL:

Shipper interest in Keystone XL remains strong, TransCanada said, with the pipeline having firm, long-term contracts to transport more than 500,000 b/d of Western Canada Sedimentary basin crude to existing US Gulf Coast refineries. TransCanada’s Bakken Marketlink, using facilities which form part of Keystone XL, currently has firm, long-term contracts to transport 65,000 b/d of Bakken crude oil from the Williston basin in North Dakota and Montana. Keystone XL’s initial capacity will be 830,000 b/d. -- May 4, 2012, Oil & Gas Journal.

So, Keystone's XL initial capacity stated by the company to be 830,000 bopd; the Enbridge-ETP joint venture above comes in at 420,000 to 660,000 bopd.