CALGARY - Enbridge Inc. announced plans Monday to spend $1.2 billion to expand its Athabasca pipeline system in order to accommodate increased production from the burgeoning Kirby oilsands region south of Fort McMurray, Alta.
"This project is a significant part of our overall plan to provide capacity for rapidly growing production from the Kirby area as well as from growth projects further north in the Athabasca region," said Stephen Wuori, Enbridge's president of liquids pipelines.
The new 345-kilometre pipeline will run alongside Enbridge's (TSX:ENB) existing Athabasca system, which can ship up to 570,000 barrels per day.
The expansion will add about 450,000 barrels per day to the southern portion of the Athabasca pipeline, from Kirby to an oilsands hub at Hardisty, Alta., with the potential to expand to 800,000 barrels per day at a low cost.
Initial oil is expected to flow through the expansion by early 2015, with full initial capacity available by 2016, Enbridge said Monday.
"Twinning our Athabasca system south of Kirby represents a highly efficient solution to the needs we are seeing for additional long-haul and short-haul capacity into Hardisty, leveraging off the advantages of our existing asset base and right-of-way," said Wuori.
"While anchored by the needs of our current connected projects, it is readily expandable to accommodate new projects which are also expected to require pipeline capacity beginning mid-decade."
Enbridge has a total of $3.6 billion in planned expansions to its regional oilsands system, which are set to come into service between this year and 2015.
Canadian Natural Resources Ltd. (TSX:CNQ) is working on the first $1.25-billion phase of a new oilsands project at Kirby, near Lac La Biche, Alta. In all, that project could have an ultimate capacity of between 70,000 and 100,000 barrels of oil per day.
The Canadian divisions of the BP PLC and Devon Corp. have a joint venture to develop land at Kirby as well.
Calgary-based Enbridge, with about 6,400 employees, operates North America's longest crude oil and liquids pipeline system transportation system and has a growing involvement in the natural gas transmission and midstream businesses. It also owns and operates Canada's largest natural gas distribution company, serving customers in Ontario, Quebec, New Brunswick and New York State.
On the Toronto Stock Exchange, Enbridge shares declined 26 cents to $31.59.