Enbridge CFO: Cushing Oil To Gulf Coast Project 'Under Discussion'

Date : 06/22/2011 @ 10:24AM
Source : Dow Jones News
Stock : Spectra Energy Partners, LP Common Units Representing Limited Partner Interests (SEP)
Quote : 42.59  0.0 (0.00%) @ 4:02PM

Enbridge CFO: Cushing Oil To Gulf Coast Project 'Under Discussion'

Enbridge (NYSE:ENB)
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Enbridge Inc. (ENB) is discussing with customers the viability of shipping crude oil from the over-supplied storage hub of Cushing, Okla., to refiners along the Gulf Coast, a company executive said Wednesday.

Increasing oil production in the U.S. midcontinent region has caused a supply glut in Cushing, forcing U.S. benchmark crude prices to fall well below those for European crude oil. Relieving supply pressure in Cushing has become a mantra for pipeline operators such as Enbridge.

"We have projects under discussion with shippers on ideas for linking Cushing to the Gulf Coast," Enbridge Chief Financial Officer Richard Bird said during an analysts meeting.

The light, sweet crude coming out of the so-called mid-continent region will eventually head to eastern refiners who now currently depend on oil priced off European benchmark Brent, which is more prevalent along the east coast, Bird said. That will create more need for pipelines that flow east, Bird said.

Meanwhile, El Paso Corp. (EP) will make a decision this year whether to build a pipeline to take ethane from the Marcellus shale in Pennsylvania to chemical refiners in Louisiana, said Mark Leland, president of El Paso's pipeline division.

The decision has been complicated by Shell Chemical's announcement earlier this month that it will build a world-scale chemical production facility in the Marcellus region, which could keep much of the ethane produced in the shale at home, Leland said. Shell Chemical is a subsidiary of Royal Dutch Shell (RDSA).

"The Shell announcement does throw a bit of a wrinkle" into the decision process, Leland said at the analysts meeting.

-By Ben Lefebvre, Dow Jones Newswires; 713-547-9201; ben.lefebvre@dowjones.com

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