Enbridge (TSX: T.ENB, Stock Forum) late Wednesday said it would spend more than $3 billion on a series of pipeline projects to move western Canadian crude to refineries in the east, as well as expanding capacity in the U.S. Midwest.
Most of the spending, about $2.6 billion, would support the reversal in flow direction of a pipeline between Sarnia, Ontario, and Montreal to move crude from the Alberta oil sands and North Dakota's Bakken Region into eastern Canadian refineries. The reversal is motivated by the fact that western Canadian crude oil has become cheaper than that from foreign suppliers.
"Refineries in Ontario and Quebec are paying premiums of $20 per barrel or more to obtain crude oil from the foreign sources they are currently largely dependent on. Access to Canadian and U.S. Bakken production will help level the playing field for these refineries, protecting their long term viability and safeguarding jobs," said Steve Wuori, president of the company's pipeline division.
Calgary-based Enbridge also said it plans to expand its oil flow capacity with a $400 million project between Neche, North Dakota, and Flanagan, Illinois, near Chicago.
Wuori expects the $3 billion plus investment to support the extension of the company’s “10% plus growth rate in earnings per share beyond the middle of this decade.”