It took a while, but Enbridge and carriers on its 3.2 MMb/d mainline system have finally reached an agreement in principle on a new toll deal that will lower per-barrel rates on the crude oil pipeline network between the western Canada and the USA. Midwest, and will also help ensure that Enbridge gets a good rate of return on its largest asset. Assuming the Main Line Toll Agreement (MTA) is approved by Canadian regulators later this year (and that seems to be a safe bet), the new fare structure should also help the line system primary to retain the vast majority of its crude volumes, although it faces new competition from the Trans Mountain Expansion (TMX) project, which will provide 590 Mb/d of additional pipeline capacity from Edmonton, AB, to the British Columbia (BC) coast starting next year. In today’s RBN blog, we talk about the MTA and what it means for Enbridge, shippers and TMX.
Some may disagree, but we’d argue that Enbridge’s Mainline system (orange lines in Figure 1) is among the most undervalued midstream assets in North America. Mostly under the radar, its pipeline group (Lines 1, 2, 3, 4, 5, 6, 7, 11, 14, 61, 62, 64, 65, 67 and 78 and 93) reliably carries more than 3 MMb/d of heavy, medium and light crude (and some NGL) from the Western Canada Sedimentary Basin to terminals in Minnesota, Wisconsin, Illinois, Indiana, Michigan and Ontario. From there, in other pipelines, many of them also owned by Enbridge, crude flows to other terminals and refineries across a wide swath of real estate between Quebec and the Gulf Coast.
For example, from Flanagan, IL, crude oil can continue on the Flanagan South or Spearhead pipelines (parallel dark pink and light pink lines; both owned by Enbridge) to the Cushing, OK crude hub, and from Cushing to Freeport, TX, on the Seaway pipeline system jointly owned by Enbridge and Enterprise Products Partners (dark blue line). Also from Flanagan, crude can flow south through the Enbridge South Access Extension Pipeline (light blue line) to the Patoka crude oil center in south-central Illinois –– Patoka is the northern term for the recently invested Capline pipeline (yellow line). And crude can flow east to Montreal on Enbridge’s Line 9 (Red Line).
