Enbridge Energy Partners, L.P
) have received shipper support for a $7 billion investment in
their Canadian and U.S. mainline system. The pipeline system runs
from Edmonton, Alberta to Superior, Winconsin.
The Line 3 Replacement (L3R) Program will augment the existing
Line 3 segment replacement program and include all remaining
segments of Line 3 between Hardisty, Alberta and Superior.
The L3R Program is scheduled for completion by the second half of
2017. In order to offer a suitable return on the additional
capital required, the mainline shippers have decided to bear
surcharges on all barrels moving on the mainline. The L3R program
will include replacement of all segments of the line between
Hardisty and Superior with new pipes using the latest available
high-strength steel and coating technology. These will
considerably reduce the long-term integrity costs to maintain the
line as well as enhance the reliability of service.
The ongoing initial development work will support the regulatory
application that needs to be submitted in late 2014. Currently,
the Canadian L3R Program, between Hardisty and Gretna, Manitoba,
is projected to cost about $4.2 billion. This project will be
carried out by Enbridge's wholly owned subsidiary, Enbridge
The U.S. L3R Program, between Neche, North Dakota and Superior,
estimated to cost about $2.6 billion, will be executed by
Enbridge Energy Partners. The funding will jointly be provided by
Enbridge and EEP at participation levels to be finalized and
approved by the EEP Special Committee. The program will eliminate
$1.1 billion of Line 3 integrity capital that would otherwise be
required by 2017, as well as eliminate additional post-2017
The capital costs on which the surcharges will be calculated will
reveal detailed estimates to be decided in the first quarter of
2014. Shippers will have the alternative to cancel the L3R
Program should the detailed cost estimate surpass the current
preliminary estimate by more than 15%. In the event of such
cancellation, all development costs incurred to that date would
be recoverable from shippers.
A 1,031 mile (1,660 kilometers), 34-inch diameter pipeline - Line
3 - is one of the six crude oil pipelines that make up the
Enbridge mainline system operating since 1968.
Enbridge Energy Partners holds a Zacks Rank #3 (Hold). Other
stocks in the oil and gas sector such as
Helmerich & Payne, Inc.
Patterson-UTI Energy Inc.
) with a Zacks Rank #1 (Strong Buy) are expected to outperform.
ENBRIDGE EGY PT (EEP): Free Stock Analysis
ENBRIDGE INC (ENB): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
PATTERSON-UTI (PTEN): Free Stock Analysis
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