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Enbridge Gets FERC Green Light for Sandpiper Project

FERC has approved North Dakota Pipeline's proposed tariff structure involving committed rates for priority and non-priority service, and uncommitted rates and apportionment principles based on Commission precedent, for the company's Sandpiper project, which would provide Bakken crude producers access to downstream markets at a new interconnection point at Superior, WI.

The uncommitted rates will be recovered through cost-based charges for the upstream expansion and the downstream extension, according to the Federal Energy Regulatory Commission order.

The project is part of a $6.2 billion, four-year effort by Enbridge Inc. to expand several of its pipelines to access light oil markets in the eastern United States and Canada first announced in late 2012 (see Shale Daily, Dec. 10, 2012). The effort to stretch Bakken and western Canadian oil supplies into new markets would increase pipeline capacity on Enbridge's North Dakota regional and U.S. mainline systems, enhance its Canadian mainline, increase its eastern access, and provide more access to U.S. Midwestern refineries. The Sandpiper piece of the puzzle was estimated to cost $2.5 billion and to be completed in early 2016.

Calgary-based Enbridge and subsidiary Enbridge Energy Partners LP (EEP) last year secured Marathon Petroleum Corp. (MPC) as an anchor shipper for the Sandpiper Pipeline (see Shale Daily, Nov. 26, 2013). EEP said MPC will fund 37.5% of the Sandpiper project in exchange for an approximate 27% stake in EEP's North Dakota feeder system.

The Sandpiper project will expand the takeaway capacity of EEP's North Dakota system by 225,000 b/d, to a total of 580,000 b/d. The expansion involves construction of a 24-inch diameter pipeline from Beaver Lodge, ND, to Clearbrook, MN, and a 30-inch diameter pipeline from Clearbrook to a mainline system terminal in Superior, WI.

The pipeline will serve as a twin to the existing 210,000 b/d North Dakota System mainline, which now terminates at Clearbook. The twin will add an additional 225,000 b/d of capacity between Beaver Lodge and Clearbrook, and 375,000 b/d of capacity between Clearbrook and Superior.

The project offered FERC the opportunity to discuss the type of projects "that are being developed and may be developed to deal with shale oil takeaway needs, not just in the Bakken, but in other parts of the country as we see expanded crude oil production," said Commissioner Tony Clark, who served as chairman of the North Dakota Public Service Commission before his appointment to FERC.

North Dakota Pipeline was known as Enbridge Pipelines (North Dakota) LLC, prior to Nov. 25, when the company name was changed to reflect the purchase by Williston Basin Pipeline Company LLC from EEP of a 37.5% interest in the Class B Units of Enbridge Pipelines (North Dakota) LLC.

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