Midstream service provider
Enbridge Energy Partners, L.P.
), through its affiliate − Enbridge Rail (North Dakota) LLC - has
signed a three-year agreement with
) - one of the largest refiners in the U.S. Financial details of
the agreement were not disclosed.
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The deal entails the delivery of the Bakken crude oil to Phillips
66 refineries on the West and East coasts. The crude-by-rail
shipments from an Enbridge terminal in Berthold, North Dakota,
will commence in May and will expand to 35,000 to 45,000 barrels
per day (BPD) by November. Eventually, some crude could also be
shipped to the Gulf Coast for processing.
This latest deal is part of the three accords that Phillips 66
signed with midstream companies to boost North American crude
delivery to U.S. refineries. The other deals include the a
five-year contract with
Targa Resources Partners L.P.
) for speeding up the delivery of up to 30,000 BPD to Phillips'
Ferndale, Washington, refinery. Targa will provide rail-unloading
and barge-loading services in Tacoma, Washington, for U.S. and
Also, Phillips 66 inked an agreement with
Magellan Midstream Partners L.P.
) to deliver about 20,000 BPD of crude from the Mississippian
Lime shale play to Phillips' Ponca City, Oklahoma, facility.
Coming back to Enbridge, its North Dakota Pipeline System remains
connected with an 80,000 BPD Berthold rail facility in its
Berthold Rail project. The facility, located near the Enbridge
North Dakota Storage units, can hold up to three unit trains at a
time. This project mainly aims to boost the take-away capacity
from North Dakota, while facilitating the oil and gas producers
and shippers to continue with their operations.
The aforesaid deals mainly emphasizes in substituting imported
crude oil and West Texas Intermediate with less expensive crude
oil from the Bakken, Mississippi Lime and other plays in the U.S.
and Canada. Crudes produced in the U.S. shale regions and in
Canada have been trading at considerable discounts compared with
the barrels delivered in coastal regions as well as imported
crudes. This helps oil and railroad companies to benefit
financially to transport domestic crude to coastal regions, where
they receive a premium price.
The units of Enbridge Energy Partners retain a Zacks Rank #3
(short-term Hold rating).