Eastern Canadian refineries are importing record volumes of light US crude - 263 Mb/d in May 2014 according to the Energy Information Administration (EIA). By the end of 2014, pipeline reversals and expansions to the Enbridge network will increase the flow of light crude to eastern refineries from Western Canada and North Dakota. The result could be even more imports from the US. Today we continue our series reviewing the extent and impact of Enbridge projects to move crude east.
In Episode One of this series, we reviewed the 9 refineries in eastern Canada with combined capacity of 1.3 MMb/d. These refineries mostly process light crude that until recently has come from offshore Atlantic seaboard production and imports, but they are processing growing volumes of US shale oil today. Extensive upgrades, reversals and expansions to the Enbridge network have begun to change the dynamics of supply to these refineries to include more Canadian and Bakken crude. In this episode we begin a description of the Enbridge upgrades with the Eastern Access project.
The huge Enbridge Mainline system (made up of multiple pipelines) can deliver up to 2.5 MMb/d of hydrocarbon liquids (mainly heavy crude from Western Canada) to the US border in Minnesota where the system name changes to Lakehead. At Clearbrook, MN Enbridge Lakehead receives incoming crude from the Enbridge North Dakota system. Once it reaches the Great Lakes at Superior, WI, the Lakehead system winds its way around Lake Michigan in two directions - flowing light crude north on Line 5 direct to Sarnia, Ontario but the majority of its payload south along two routes – one through Chicago that mostly feeds refineries in the Windy City and the other further west to Flanagan, IL. The Flanagan terminal in Pontiac, IL is the central pivot point in the Enbridge US system with crude flowing from there either north and east through Illinois to Griffith, IN and then back into Canada at Sarnia or southwest to Cushing, OK. This series details Enbridge initiatives to increase eastbound flows. See our recent series “Promised Land” Part 1 and Part 2 for details of the Enbridge Western Gulf Coast Market Access initiative to flow more Mainline crude to Cushing and south to Houston.
N E W ! ! Tailgate Blues: NGL Markets and Natural Gas Processing Economics
We have just released our eighth Drill-Down report for Backstage Pass subscribers reviewing natural gas processing economics and the RBN Frac Spread and Processing Economics models. More information about Tailgate Blues here.
Enbridge Eastern Access and Light Oil Markets Access Initiatives
Figure #1 below show the Enbridge Eastern Access (left map) and the Light Oil Markets Access (LOMA - right map) initiatives. Although these are separate projects, it is hard to make sense of them without looking at both to start with. As we explain below, the Eastern Access projects are nearing completion and should be in operation by the end of 2014. These projects really lay the groundwork for increased supplies of both light and heavy crude to flow eastbound on Enbridge’s main pipeline corridor across the Midwest from Flanagan, IL to Montreal. Bear in mind here that many of these pipelines have been in place since the 1950’s and that they have been feeding refineries in the Midwest for decades. The big challenge for Enbridge has been to increase the flows of crude along these routes to meet new demand and deliver increased Canadian and Bakken supplies to market. To accomplish that Enbridge had to expand, replace and reverse sections of that corridor of pipelines through the Midwest before they could move higher volumes of crude south through the Mainline and Lakehead systems. The second set of initiatives – LOMA – that will be completed by mid-2016 is designed to facilitate increased flows of light crude oil out of North Dakota via the Sandpiper project (we cover that in the next episode) and to deliver that crude to Flanagan so that it can flow east on the expanded corridor. LOMA also makes further incremental expansions to the corridor from Flanagan to Montreal to provide enough capacity to meet expected demand for crude in eastern Canada as well as feeding refineries in the US Midwest that these pipelines have been supplying for decades. We are going to walk through both of these major initiatives, starting with Eastern Access.