FREEPORT — Officials from Enbridge and Enterprise Products Partners LP joined Canadian dignitaries in the Texas wetlands on Friday to officially recognize the opening of a multi-pipeline system bringing Canadian crude oil to the Houston area.
The new and expanded crude pathways mean more crude from Canadian oil sands will be able to make to make its way to the refineries of the Gulf Coast, where the heavier grade crude has already been competing against crudes traditionally imported from countries such as Venezuela.
Executives at the event hailed the route as a step toward North American energy independence.
“Make no mistake about it, Canadian crude is going to compete in this market,” said Al Monaco, President and CEO of Enbridge, “and it’s going to compete against waterborne imports.”
Both companies have spent the past few years expanding capacity on a number of pipelines stretching from the oil sands of Alberta, Canada to Houston. The route begins with Enbridge’s Alberta Clipper line, which traverses the border and runs into the Great Lakes region. Enbridge has requested authorization to expand and ship more crude across the border on the line, but the expansion has yet to be approved.
From the Clipper’s end, Canadian crude is able to travel south from Illinois to the oil hub in Cushing, Oklahoma via Enbridge’s parallel Spearhead and Flanagan South pipelines. The $2.8 billion, 600,000-barrel-per day Flanagan South line began service in December.
From Cushing, Enterprise Products Partners and Enbridge co-own the Seaway pipeline, which runs into Houston. The Seaway line has been in service since about 1976, but in 2012, the line was reversed to bring crude from the storage tanks of Cushing to the refiners of the Gulf Coast.
In July, Enbridge and Enterprise completed a parallel line that more than doubled the capacity of Seaway to 850,000 barrels per day. The line is currently running at about 250,000 barrels per day, the company said.
The first oil flowed through the entire expanded system in late December, executives said, coming from Canada’s oil sands at a rate of about four miles per hour.
The expanded capacity has already helped bring the price heavy crude at Hardisty in Alberta has lost much of its discount to international crude prices, said John Auers of Turner Mason & Co.
“Even before those first barrels have flowed, it’s made a big difference for Canada’s prices, which have traded at a discount to Mexican crude,” Auers said. “That differential started closing below $20 for the first time in awhile in the early part of 2014. It averaged $13 in 2014. Here recently it’s been under $10 dollars. That’s pretty much pipeline fare.”