10/01/2013 12:05 EDT | Updated 12/01/2013 05:12 EST

Enbridge Norlite Project: $1B Diluent Pipeline Planned For Nothern Alberta By Oilsands Shipping Giant

CALGARY - Enbridge Inc. (TSX:ENB) has projects in the works to bring more bitumen-thinning diluent to customers in the oilsands, the company told investors on Tuesday.

The company is pitching a new $1-billion conduit in northern Alberta called Norlite, which could initially ship 200,000 barrels per day of light oil or condensate to oilsands customers to enable their sticky, tar-like product to flow through pipelines.

Depending on how keen the industry is on the pipeline, it could be expanded to 300,000 barrels per day, said Vern Yu, senior vice-president of business and market development.

Traditionally, oilsands producers have used pipelines dedicated to each of their projects to bring in diluent, Yu told Enbridge's investor day in Toronto.

Enbridge is now looking at an industry-wide approach with Norlite.

"What we've found is that being able to offer an industry solution, we are able to offer lower tolls to our customers," Yu said.

"So we're pretty much at the final stages of getting commercial support with a few anchor shippers to make a project go forward...We hope to finalize these commercial discussions in the next few months and be able to formally announce the project."

Enbridge is also looking to expand its Southern Lights pipeline, which ships diluent from the Chicago area to the Edmonton region. The line could be expanded by almost 100,000 barrels per day at a cost of $700 million and be in service by late 2016, Yu said.

Enbridge expects to hold an open season — a process to gauge shipper interest in the project — on the Southern Lights expansion toward the end of this year.

With oilsands players nixing plans to build multibillion-dollar upgraders to process their bitumen, diluent is a crucial ingredient that enables those companies to get their raw bitumen to market by pipeline.

Enbridge is the dominant Alberta crude shipper, transporting more than one million barrels a day from the Fort McMurray, Alta., area to market hubs in Edmonton and Hardisty, Alta., along its Athabasca and Waupisoo pipelines.

Projects are in the works to nearly double that capacity, and Yu said he expects Enbridge will have enough commercial support to build another pipeline to Edmonton and another one to Hardisty by the latter part of this decade.

At its annual Investor Day, Enbridge laid out details of the $36 billion in capital projects it is planning between this year and 2017. Of that, $26 billion is for projects that already have secure commercial support. That should allow for 10 to 12 per cent growth in earnings per share, said CEO Al Monaco.

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