By Scott Haggett
CALGARY, Alberta (Reuters) - Enbridge Inc <ENB. TO> said on Tuesday it plans to build a new C$1 billion ($972.86 million) pipeline to carry 200,000 barrels per day of diluent, or thinning agent, from Edmonton, Alberta, to oil sands operators near Fort McMurray, Alberta.
Enbridge, Canada's No. 1 pipeline company, said the planned Norlite line may be expanded to carry 300,000 bpd should it receive enough support from oil sands producers, who blend the diluent into heavy oil so it can flow in pipelines.
Enbridge is in the midst of a major expansion of its pipeline network, which carries the bulk of Canada's crude exports to the United States, to accommodate rising production from Alberta and North Dakota's shale-oil fields and to move that oil to new markets on the Gulf coast.
"You're seeing essentially a reconfiguring of the (oil) transportation grid in North America," Al Monaco, Enbridge's chief executive, said at the company's annual investment conference. "
While North Dakota's light oil can move directly onto Enbridge's pipelines, bitumen from the oil sands must be blended with diluent. With production from the northern Alberta region expected to climb by 1 million barrels per day, to 4.9 million bpd by 2020, according to industry forecasts, new diluent supply is critical for producers.
The company also plans to spend C$700 million to expand its Southern Lights pipeline by 95,000 bpd to 275,000 bpd. The line carries diluent from Chicago to Edmonton.
Enbridge is also revamping plans for its $2.5 billion Sandpiper pipeline that would take North Dakota crude to Minnesota and Wisconsin. The U. S. Federal Energy Regulatory Commission (FERC) rejected the company's initial proposal in March after refiners complained about planned surcharges for moving oil on the conduit.
Under its original proposal, the 375,000 bpd pipeline was to be open to all shippers, but now Enbridge plans to turn Sandpiper into a contract line, with only a small amount of capacity open for spot shipments.
"Once we have contract commitments sufficient to make the project go forward ... we will refile (for regulatory approval) sometime this fall," said Steve Wuori, president of Enbridge's liquids pipeline division. "We feel that we've addressed all the concerns that FERC raised when they turned it back to us."
Enbridge shares were down 60 Canadian cents to C$42.42 by midafternoon on the Toronto Stock Exchange.
($1 = 1.03 Canadian dollars)
(Reporting by Scott Haggett; Editing by Chizu Nomiyama)