EPD, Enbridge Boost Seaway Capacity - Analyst Blog


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Pipeline companies, Enterprise Products Partners LP ( EPD ) and Enbridge Inc. ( ENB ) announced plans to increase their crude consignments to the U.S. Gulf Coast in response to the supply enhancement from Canada's oil sands and the Bakken Shale in the Northern Plains.

Both parties plan for the expansion of the Seaway Pipeline that will add 450,000 barrels per day (BPD) to the existing facility. This expansion is expected to eventually double the capacity of the system to 850,000 BPD. Seaway Pipeline will connect the U.S. oil trading hub at Cushing, Oklahoma, with the Gulf Coast by mid-2014.

Additionally, Enbridge intends to develop its Flanagan South project that links Flanagan, Illinois, to the U.S. Gulf Coast. The company will construct a 36 inch diameter pipeline with an initial capacity of 585,000 BPD.

Capacity expansion of the Seaway pipeline, together with Enbridge's Flanagan South project is expected to facilitate crude oil producers in transporting oil to U.S. Gulf Coast refineries. Additional capacity at Seaway will support the sustained growth of production from regions that include Bakken Shale. Notably, the Seaway system is also being reversed to ease the glut at Cushing. The Seaway reversal and expansion is valued at $2 billion, which will be shared uniformly between Enbridge and Enterprise.

Earlier, Enterpriseannounced plans to augment the crude oil storage capacity at its Enterprise Crude Houston ( ECHO ) crude oil terminal, presently under construction at southeast Harris County. The ECHO terminal is in the vicinity of two crude oil pipelines, including the Seaway system that is among the first projects built to ease the oil pressure in Cushing. The ECHO facility is being developed as the leading delivery point in the Gulf Coast for the growing North American crude oil output and also offers shippers prospects to capitalize on their production.

Enterprise Products Partners, a leading master limited partnership ( MLP ), is engaged in a wide range of midstream energy services to producers and consumers of natural gas, natural gas liquid, and crude oil. With its diverse set of midstream infrastructure assets, we believe the partnership possesses fundamental strengths, which will in turn support distribution growth consistently.

Enterprise holds a Zacks #1 Rank, which is equivalent to a Strong Buy rating for a period of one to three months. For the long term, we maintain an Outperform rating on the stock.

ENBRIDGE INC ( ENB ): Free Stock Analysis Report
ENTERPRISE PROD ( EPD ): Free Stock Analysis Report
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This article appears in: Investing , Business , Stocks
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