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Interconnection Fight Threatens Proposed Bakken Oil Pipeline

A proposed 16-inch diameter, 450-mile oil pipeline from North Dakota's Bakken Shale to a hub near Clearbrook, MN, is at risk for delay or termination due to a stalemate with Enbridge Energy Partners LP, which is refusing to allow an interconnection with its pipeline in Minnesota, according to High Prairie Pipeline, which has filed a complaint at FERC.

At stake longer term is the fate of up to 150,000 b/d and relations between two Bakken stakeholders. High Prairie is one of six separate proposals for pipeline takeaway capacity in North Dakota totaling 900,000 b/d, according to state pipeline authority officials. The unprecedented growth in production in the state has caused rail transportation to balloon up to 25% of the state's oil shipments (see Shale Daily, April 18).

In the meantime, High Prairie, which is a unit of Durango, CO-based Saddle Butte Pipeline LLC, is left with few options, according to Greg Ward, vice president. Interconnection with Minnesota Pipeline and rail shipment from Clearbrook would take care of some of the volumes, Ward told NGI's Shale Daily Thursday.

Based on an open season earlier this year, at which time Enbridge indicated the interconnect was doable, High Prairie committed to five-, 10- and 15-year contracts with shippers that called for the interconnection with Enbridge's pipeline. Subsequently, Enbridge acknowledged that its pipeline out of Canada would be full in the 2016-2017 period because of additional shipments of tar sands supplies out of Alberta.

"Our binding commitments for this project with the shippers are contingent upon having the interconnection with Enbridge," Ward said. "Without that interconnect, those binding commitments essentially terminate, and the project will likely terminate as well.

"Before we launched the open season we talked to Enbridge and asked if the interconnection would be a problem. They said that it would not be, so we launched the open season on Feb. 14, and it wasn't until the first week of April that they came back to us and said it would be a problem." However, even after that disclosure, Enbridge said it had capacity now to accept the volumes, but in 2016 and 2017 it expected the additional tar sands supplies from one of its affiliates to change the situation.

High Prairie is alleging that this move is "discriminatory" on Enbridge's part, which is illegal for an open access pipeline under the Federal Energy Regulatory Commission's (FERC) oversight. "The added tar sands oil would essentially push out [our] volumes," Ward said.

"Our contention is that [Enbridge] is a common-carrier pipeline, and as such, they can't show any preference or discriminate [under the Interstate Commerce Act] against any one party, and that is exactly what they are doing here. They are allowing an affiliate to interconnect at Clearbrook and allow tar sands oil from Canada to come through, but denying us that same opportunity."

This is essentially the legal argument that High Prairie is making at FERC, said Ward, who added that the fourth quarter 2013 in-service date for the new pipeline will be delayed at minimum if the issue is not resolved soon.

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