Enbridge Energy Partners to Invest $3.4 Billion in Light Oil Market
HOUSTON, TEXAS -- (Marketwire) -- 12/06/12 -- Enbridge Energy
Partners, L.P. (NYSE:EEP) ("Enbridge Partners" or "the Partnership")
announced today its plans to invest in a Light Oil Market Access
Program (the "Program") to expand access to markets for growing
volumes of North Dakota and western Canada light oil production. The
overall Program includes a number of individual projects, some of
which will be jointly funded by the Partnership and Enbridge Inc.
(Enbridge) (NYSE:ENB) (TSX:ENB), and certain projects that will be
funded entirely by the Partnership.
Enbridge Partners' investment in the Program is expected to be
approximately $3.4 billion. The joint funding arrangements between
the Partnership and Enbridge provide Enbridge Partners with options
to increase or decrease its investment in certain projects to match
its funding capability. The Partnership's investments will be
undertaken on a fixed return cost-of-service basis under which it
will not be exposed to throughput risk or capital cost risk. Broad
shipper support has been demonstrated for the Program and the
associated rate principles. The projects that comprise the Program
are subject to respective customary regulatory approvals.
The Light Oil Market Access Program responds to significant recent
developments with respect to supply of light oil from U.S. north
central formations and western Canada, as well as refinery demand for
light oil in the U.S. Midwest and eastern Canada. On the supply side,
production from the Bakken formation centered in North Dakota has
grown from 200,000 barrels per day (bpd) to 700,000 bpd in the last
five years with potential to expand to 1,200,000 bpd or more in the
next five years, if transportation access to refinery markets is
available. Additional growth in light crude production of 100,000 bpd
or more is anticipated from application of latest recovery
technologies to the Cardium and Viking formations in Alberta, Canada.
Supply from these areas has become increasingly attractive to
refineries in the U.S. Midwest and eastern Canada compared to much
more costly alternative sources.
The individual projects to be undertaken by the Partnership pursuant
to the Light Oil Market Access P
rogram are summarized as follows:
Light Oil Market Access Projects
Project Estimated Cost Target Funding
1. Sandpiper Project $2.5 billion early 2016 EEP
2. Eastern Access Upsize
Line 6B expansion Joint
$0.4 billion early 2016 (ENB/EEP)
3. U.S. Mainline System
Chicago Area Connectivity (Line Joint
62 Twin Flanagan to Griffith) $0.5 billion mid-2015 (ENB/EEP)
Superior to Flanagan (Line 61 Joint
capacity expansion) $1.3 billion mid-2015 (ENB/EEP)
North Dakota System Expansion/Extension (Sandpiper Project)
The Program includes the Sandpiper Project which will expand and
extend the Partnership's North Dakota feeder system. The Bakken
takeaway capacity of the Partnership's North Dakota System will be
expanded by 225,000 bpd to a total of 580,000 bpd, with a target in
service date of early 2016. The expansion will involve construction
of an approximately 600-mile 24-inch diameter line from Beaver Lodge,
North Dakota, to the Superior, Wisconsin, mainline system terminal.
The new line will twin the 210,000 bpd North Dakota System mainline,
which now terminates at Clearbrook Terminal in Minnesota, adding
225,000 bpd of capacity on the twin line between Beaver Lodge and
Clearbrook, and 375,000 bpd of capacity between Clearbrook and
The estimated capital cost of this project is approximately $2.5
billion. The capital cost will be rolled into the existing North
Dakota System rate base, with the associated cost of service to be
recovered in tolls. The Sandpiper Project commercial terms remain
subject to approval by the Federal Energy Regulatory Commission
(FERC), as filed in the Petition for Declaratory Order filed with
FERC on November 2, 2012. The commercial terms filed with FERC have
support from numerous shippers and stakeholders on the North Dakota
System. EEP will fully fund the Sandpiper Project.
The Program also includes several distinct expansions of the Lakehead
mainline system held within the Partnership.
Eastern Access Upsize
A further upsizing of the Line 6B component of the Eastern Access
Program will increase capacity on the pipeline to 570,000 bpd from
the previously announced 500,000 bpd and is required to permit
additional deliveries of light oil to eastern Canada, at an expected
cost of $0.4 billion. This additional capital will bring the
estimated total cost of the Eastern Access Program supporting
mainline expansions to $2.6 billion. This entire amount is included
in the Eastern Access Joint Funding Arrangement pursuant to which
Enbridge will fund 60 percent of the cost and the Partnership will
fund 40 percent, with options to pare down by up to 15 percent or to
increase its economic interest by up to 15 percent.
U.S. Mainline System
To accommodate additional light crude demand by Chicago-area
refineries as well as additional Ontario and Quebec demand, the
capacity of the Lakehead System between Flanagan, Illinois, and
Griffith, Indiana, will be expanded by constructing a 76-mile 36-inch
diameter twin of Line 62 with an initial capacity of 570,000 bpd, at
an estimated cost of $0.5 billion. Further, the capacity of the
42-inch diameter Line 61 will be expanded to its full 1,200,000 bpd
potential at an estimated cost of approximately $1.3 billion, with a
target in-service date of mid-2015.
Enbridge shippers have approved the inclusion of the aggregate of
$1.8 billion of capital for these projects in the Lakehead System's
local toll cost-of-service surcharge mechanism.
The U.S. mainline expansion projects, as announced earlier this year,
were previously to have been funded by Enbridge Energy Partners.
These previously announced projects, in addition to the Chicago Area
Connectivity and Line 61 upsizing capital requirements will now be
jointly funded by Enbridge and the Partnership, under a Mainline
Expansion Joint Funding Arrangement which parallels the Eastern
Access Joint Funding Arrangement.
The Partnership's investment in the Light Oil Market Access Program
will be approximately $3.4 billion, subject to adjustment upward or
downward through the options that the Partnership retains under the
joint funding arrangement for Eastern Access and the Mainline
Expansion projects. To provide financing flexibility for the
Partnership, the exercise period that will allow Enbridge Partners to
decrease its economic interest and associated funding of these
projects by up to 15 percentage points was extended to June 30, 2013
from December 31, 2012.
Additionally, within one year of the last in-service date for the
Eastern Access and the Mainline Expansion projects, respectively, the
Partnership will also have the option to increase its economic
interest held at that time by up to 15 percentage points.
Enbridge Partners will also benefit from additional cost-of-service
earnings on $0.3 billion of capital which was invested by the
Partnership in the original development of the 42-inch Line 61 but
which, under the terms of the agreement with shippers, is not
eligible for recovery in rates until the full capacity of the line is
required. This feature enhances the financial attractiveness of the
overall Light Oil Market Access Program to the Partnership since it
provides incremental earnings and cash flow with no associated
"The additional cash flow from the Partnership's investment in this
program will be a major contributor to our plans to deliver cash
distribution growth at the higher end of our 2 percent to 5 percent
target," said Mark Maki, President of Enbridge Partners. "The
cost-of-service rate principles ensure that the Partnership will
achieve a reasonable return on its investment without exposure to
throughput or capital cost risks. The low risk commercial
underpinnings of these growth projects will progressively transform
the Partnership to a lower risk business model. The joint funding
arrangements applicable to both the Eastern Access and Mainline
Expansion projects ensure that we have the opportunity to expand our
investment in these attractive opportunities while providing us with
substantial flexibility to manage our funding requirements."
MANAGEMENT PRESENTATION OF LIQUIDS EXPANSION PROJECTS
Enbridge Partners will present and review the liquids expansion
projects in an Internet presentation, commencing at 9:30 a.m. Eastern
Time on December 7, 2012. Interested parties may watch the live
webcast at the link provided below. A replay will be available
shortly afterward. Presentation slides will also be available at the
EEP Events and Presentations: www.enbridgepartners.com/
Alternative Webcast link:
The audio portion of the presentation will be accessible by telephone
at (866) 700-6067 (Passcode: 27371741) and can be replayed until
March 8, 2012 by calling (888) 286-8010 (Passcode: 25912644). An
audio replay will also be available from either of the website
About Enbridge Energy Partners, L.P.
Enbridge Energy Partners, L.P. (www.enbridgepartners.com) owns and
operates a diversified portfolio of crude oil and natural gas
transportation systems in the United States. Its principal crude oil
system is the largest transporter of growing oil production from
western Canada. The system's deliveries to refining centers and
connected carriers in the United States account for approximately 13
percent of total U.S. oil imports; while deliveries to Ontario,
Canada satisfy approximately 70 percent of refinery demand in that
region. The Partnership's natural gas gathering, treating, processing
and transmission assets, which are principally located onshore in the
active U.S. Mid-Continent and Gulf Coast area, deliver approximately
2.5 billion cubic feet of natural gas daily.
Enbridge Energy Management, L.L.C. (www.enbridgemanagement.com)
manages the business and affairs of the Partnership and its sole
asset is an approximate 13 percent interest in the Partnership.
Enbridge Energy Company, Inc., an indirect wholly owned subsidiary of
Enbridge Inc. of Calgary, Alberta, (NYSE:ENB) (TSX:ENB)
(www.enbridge.com) is the general partner and holds an approximate 22
percent interest in the Partnership.
This news release includes forward-looking statements and
projections, which are statements that do not relate strictly to
historical or current facts. These statements frequently use the
following words, variations thereon or comparable terminology:
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"forecast," "intend," "may," "plan," "position," "projection,"
"should," "strategy," "will" and similar words. Although we believe
that such forward looking statements are reasonable based on
currently available information, such statements involve risks,
uncertainties and assumptions and are not guarantees of performance.
Future actions, conditions or events and future results of operations
may differ materially from those expressed in these forward-looking
statements. Many of the factors that will determine these results are
beyond Enbridge Partners' ability to control or predict. Specific
factors that could cause actual results to differ from those in the
forward-looking statements include: (1) changes in the demand for or
the supply of, forecast data for, and price trends related to crude
oil, liquid petroleum, natural gas and NGLs, including the rate of
development of the Alberta Oil Sands; (2) Enbridge Partners' ability
to successfully complete and finance expansion projects; (3) the
effects of competition, in particular, by other pipeline systems; (4)
shut-downs or cutbacks at facilities of Enbridge Partners or
refineries, petrochemical plants, utilities or other businesses for
which Enbridge Partners transports products or to whom Enbridge
Partners sells products; (5) hazards and operating risks that may not
be covered fully by insurance; (6) changes in or challenges to
Enbridge Partners' tariff rates; and (7) changes in laws or
regulations to which Enbridge Partners is subject, including
compliance with environmental and operational safety regulations that
may increase costs of system integrity testing and maintenance.
Reference should also be made to Enbridge Partners' filings with the
U.S. Securities and Exchange Commission, including its Annual Report
on Form 10-K for the most recently completed fiscal year and its
subsequently filed Quarterly Reports on Form 10-Q, for additional
factors that may affect results. These filings are available to the
public over the Internet at the SEC's web site (www.sec.gov) and at
the Partnership's web site.
Enbridge Energy Partners, L.P.
Investor Relations Contact:
Toll-free: (866) EEP INFO or (866) 337-4636
Enbridge Energy Partners, L.P.
(713) 713-821-2253 or Toll-free: (877) 496-8142
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