The Change Mariner

New Pipeline to Bring Canadian Oil to Texas

HoustonBusiness Journal:
A century after oil gushed out of the ground in Texas at Spindletop, a Houston company is planning to build a pipeline to bring oil to Texas from Canada.

Enbridge Energy Partners LLP last month announced plans to develop a new 630-mile, $600 million crude oil pipeline from Superior, Wis., south to Wood River in southern Illinois, where it will connect with an existing Enbridge pipeline that runs north from Cushing, Okla.

Enbridge plans to reverse the flow of the old pipeline, which has traditionally carried oil north from the oilfields of Oklahoma and Texas to Illinois. By 2005, that pipeline is expected to begin bringing 200,000 barrels of Canadian crude oil a day south to the major oil pipeline hub at Cushing.

And the ultimate target of Enbridge's strategy is to bring Canadian oil all the way down to the Gulf Coast.

It's a sign of the steep decline in U.S. land-based oil reserves and production.

It's also related to the political upheaval in Venezuela, which was a major exporter of oil to the U.S. -- particularly the refineries along the Gulf Coast -- until a national strike against the government earlier this year decimated that country's oil production and exports.

"There is huge heavy oil refining capacity on the Gulf Coast, and that's why Enbridge wants to build these pipelines -- to tap the huge oilsands reserves in Canada and bring it to the enormous markets for heavy oil on the Gulf Coast," says an industry consultant in Houston whose firm has been involved in advising Enbridge and some of its refinery customers.