Citing growing oil production from shale plays, Enterprise Products Partners LP and Enbridge Inc. said Thursday they plan to construct a pipeline to transport crude oil from the oversupplied hub at Cushing, OK, to the Texas Gulf Coast refining complex. Enterprise recently scrapped plans to pursue a similar project with a different partner.

The Wrangler Pipeline would have initial capacity to transport up to 800,000 b/d of crude and accommodate the constrained medium to light crude oil currently stranded at Cushing and priced at a substantial discount to the oil imports that account for most of the supply being used by Gulf Coast refiners.

The pipeline would also have the capability to handle additional supplies of crude arriving at Cushing from other North American producers and would have the capability to be expanded.

U.S. Midcontinent crude oil supplies are growing rapidly and that trend is expected to continue as a result of the development of shale plays such as Bone Spring/Avalon, Bakken, Niobrara and Barnett, the companies said. A study being conducted by Bentek Energy LLC and Turner, Mason & Co. also suggests that growth in domestic oil production will be robust in the coming years, thanks to shale plays (see Shale Daily, Sept. 29).

In August Enterprise and Energy Transfer Partners LP scrapped their plans to construct a 584-mile crude oil pipeline from Cushing to Houston (see Shale Daily, Aug. 23). Enterprise said at the time that while there was shipper interest in the project, “agreements with the capacity and terms necessary to commercially support the project as planned were not sufficient.” The project was announced last April (see Shale Daily, April 27).

Still, refiners and oil producers are seeking new pipeline routes south of Cushing rather than the historical northerly supply routes out of the crude oil hub, Enterprise and Enbridge said Thursday. “The Wrangler Pipeline will offer flexible solutions to shippers seeking to move crude oil out of the Cushing hub, solving the current lack of transportation options following recent changes in supply routes in North America,” said Enbridge CEO Patrick D. Daniel.

A driver of the project is demand by Gulf Coast refineries for Western Canadian crude oil supplies, which have been growing since Alberta oil first accessed the Cushing Hub over the last decade, they said.

“This pipeline will be able to transport all grades of crude oil in batched configuration to meet the diverse needs of shippers, allowing producers to maximize the value of their crude oil and provide a more reliable source of domestic supply for Gulf Coast refiners,” said Michael A. Creel, CEO of Enterprise’s general partner.

The 36-inch diameter pipeline would originate at the existing Enbridge Cushing Terminal and extend about 500 miles southward, closely following existing pipeline corridors, to Enterprise’s ECHO crude oil storage terminal in southeast Harris County, TX, providing access to refineries in Texas City, Pasadena/Deer Park, Baytown and along the Houston Ship Channel. New storage tankage necessary for pipeline operations would be located at the ECHO site and included in the joint venture. The project would also include a new 85-mile pipeline to the Beaumont/Port Arthur refining center.

Subject to approvals and customer commitments, the pipeline is expected to be in service by mid-2013.

A binding open season for capacity on the new pipeline is to begin Monday (Oct. 3) and tun through Nov. 2. For information visit www.wranglerpipeline.com. Enbridge will hold a concurrent binding open season offering capacity from Flanagan, IL, to the Texas Gulf Coast utilizing a portion of capacity available on the Wrangler Pipeline. For information contact Brad Shamla at (403) 231-5915, or brad.shamla@enbridge.com; or Vince Paradis at (403) 231-5991, or vince.paradis@enbridge.com.

A portion of TransCanada’s Corp. $13 billion Keystone Pipeline project would carry crude from Cushing to Port Arthur, TX. Keystone Cushing (Phase II), an extension of the Keystone Pipeline from Steele City, NE, to Cushing, went into service in February. The 36-inch diameter pipeline connects to storage and distribution facilities at Cushing.

The proposed Keystone Gulf Coast Expansion would be a 1,661-mile, 36-inch diameter crude oil pipeline beginning at Hardisty, AB, and extend southeast through Saskatchewan, Montana, South Dakota and Nebraska. It would incorporate a portion of the Keystone Pipeline (Phase II) through Nebraska and Kansas to serve markets at Cushing before continuing through Oklahoma to a delivery point near existing terminals in Nederland, TX, to serve the Port Arthur, TX, marketplace.

And at the beginning of September, Magellan Midstream Partners LP said it would proceed with the reversal and conversion of a portion of its 18-inch diameter Houston-to-El Paso pipeline to crude oil service with an initial capacity of 135,000 b/d to refiners in Houston and Texas City. “We believe our project represents the most direct and cost-efficient route to safely deliver growing West Texas crude oil production to the refineries in the Houston and Texas City area, providing alternative transportation options that will help alleviate the current crude oil oversupply situation in Cushing, OK,” said Magellan CEO Michael Mears. The Magellan project is expected to cost about $275 million and be in service in mid-2013.