Companies push duelling pipelines – by Claudia Cattaneo (National Post – November 17, 2011)

The National Post is Canada’s second largest national paper.

With the proposed Keystone XL pipeline beached for 18 months thanks to environmental lobby opposition, pipeline companies are switching to a step-by-step strategy to push growing Canadian oil production down to the U.S. Gulf Coast.

It’s a tough chess game next to the door-to-door, Alberta-to-Texas Keystone XL solution, but it could mean greater success and derail the greens’ goal to shut down the oil sands.

On Wednesday, Calgary-based Enbridge Inc., rival of Keystone XL proponent TransCanada Corp., announced the purchase of ConocoPhillip’s 50% interest in the Seaway pipeline for US$1.15 billion. Enbridge and its partner, Houston-based Enterprise Products Partners LP, owner of Seaway’s remaining 50%, plan to reverse the flow of the pipeline that currently moves oil from Freeport, Tex., to the Cushing, Okla., oil storage hub, where a glut has depressed Midwest oil prices below world prices.

Pending regulatory approval, the Seaway pipeline could carry 150,000 barrels a day by the second quarter of 2012, and up to 400,000 b/d early in 2013 by adding pump stations.

In addition, the two companies are jointly pursuing the 800,000 b/d Wrangler pipeline, also between Cushing and the Gulf Coast. Enbridge said the Seaway and Wrangler pipelines are complementary.

Also Wednesday, TransCanada said it could build a section of its Keystone XL pipeline, from Cushing to the Gulf Coast, early next year, even as the rest of Keystone XL remains on hold pending another review by the U.S. State Department. The company has also proposed changing Keystone XL’s route in Nebraska to avoid environmentally sensitive areas.

“They are operating in an environment of what is possible and available, without raising a high political profile” said Fred Cedoz, vice-president and co-founder of GWEST, a Washington-based natural resources policy and business consulting firm.

For the rest of this column, please go to the National Post/Financial Post website: http://business.financialpost.com/2011/11/16/companies-push-duelling-pipelines/

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