Canada's largest pipeline company Enbridge Inc may build a 140 000 bpd unit train unloading terminal in Pontiac, Illinois, to relieve congestion on its crude oil export network.
The terminal would be able to handle two unit trains a day and could be in service by Q1 2016, according to a filing with the Federal Energy Regulatory Commission.
Pontiac is the origin of Enbridge's new 600 000 bpd Flanagan South pipeline to Cushing, Oklahoma, and the rail terminal would allow shippers to bypass congestion on pipelines in the Canadian portion of Enbridge's export network.
Enbridge Energy Partners LP, the company's US arm, is also petitioning to build a new receipt point on the network, known as the Lakehead system, at Flanagan Illinois, which would allow crude to be loaded from rail cars onto Flanagan South.
Enbridge spokesman Graham White confirmed an affiliate of Enbridge is exploring the potential to establish a rail unloading facility near Pontiac. He added the project is still in development.
"It is expected to provide regional refineries access to growing supplies of crude oil from North American producers and to also provide relief during periods when upstream apportionment prevents those barrels from moving via an all-pipeline route," he said.
Apportionment, when the amount of crude shippers can transport on a pipeline is rationed, is a regular source of frustration for Canadian crude traders, who are often left scrambling to sell barrels in Alberta as a result.
Enbridge has been rushing to expand its 2.5 million bpd export network as surging production from the oil sands outpaces pipeline capacity, creating crude bottlenecks in Alberta and trading at a discount to US grades.
But construction schedules and unexpected delays in securing a presidential permit for the expansion of the cross-border Alberta Clipper pipeline means once Flanagan South starts up later this year, there will be mismatched capacity between the southern and northern parts of the network.
Traders in Calgary have warned that choke points could emerge upstream in Canada, potentially leaving unused capacity on the downstream part of the system.
Enbridge said the proposed rail terminal would help bridge that temporary gap.
"Enbridge now foresees the possibility that there will be a temporary period during which the downstream pipelines will have somewhat greater take-away capacity at Flanagan than the upstream delivery capacity available to serve Flanagan," the company said in its FERC filing.
The terminal will "provide relief during periods when upstream apportionment prevents those barrels from moving via an all-pipeline route," Enbridge said.
The project is among the first major rail-to-pipe projects in the US and lends support to the long-discussed rail-pipe hybrid model as a workaround to the increasing opposition and regulatory delays faced by major crude pipeline projects, particularly ones carrying oil sands crude from Canada to the US.
Pipeline companies like Enbridge are also increasingly looking to crude-by-rail to supplement their traditional midstream assets. TransCanada, the company behind the long-delayed cross-border Keystone XL pipeline, has said it is looking into building crude-by-rail options for its customers. Energy Transfer Partners (ETP) also recently announced plans for a rail facility in Patoka, Illinois, as part of a new North Dakota-to-Texas pipeline system.
Edited from various sources by Elizabeth Corner
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