$2.6B Enbridge pipeline would carry North Dakota oil

Calgary-basedEnbridgeEnergy has applied to build the $2.6 billion Sandpiper pipeline from western North Dakota's booming oil patch to refineries in Minnesota and Wisconsin.

Enbridgeapplied to North Dakota regulators, saying the 980-km line would carry 225,000 barrels of oil to a hub in northern Minnesota and 375,000 barrels to one in northwestern Wisconsin every day. If approved, it would be the largest pipeline moving oil out of North Dakota, the U.S. second-leading producer of oil behind Texas.

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North Dakota has more than doubled its oil production in the past two years, closing in on a million barrels of oil a day. But due to the lack of pipeline capacity in the state, about 61 per cent of the state's daily oil production is being shipped by rail. A barrel is equivalent to 42 gallons.

Enbridge's application to regulators argues that the project is "needed and in the public interest."

The company submitted the application last week to the North Dakota Public Service Commission and will take similar steps with regulators in Minnesota and Wisconsin in the next month, company spokeswoman Katie Haarsager said.

Approaching oil producers

But she noted that soliciting and securing shipping contracts from oil producer, during a process called "open season," is as vital as obtaining permits for the project.

"The open season is very important and allows us to ensure that we have shippers' interest in the project. A successful open season means we should have a successful project," she said Tuesday.

Haarsager said Enbridge will begin the open season within the week and it will be in effect from one to three months.

The pipeline is the biggest project yet to come before North Dakota regulators to move oil from the rich Bakken and Three Forks formations in the western part of the state, said Brian Kalk, who heads the North Dakota Public Service Commission. The three-member commission oversees a slew of public interests, from pipelines to grain elevators, though much of its recent work has involved the oil and natural gas industry.

The new pipeline, the company argued in its application, would provide "a timely, cost effective and long-term transportation solution, thereby serving the public's interest in improved access to an abundant, secure, and reliable crude oil supply to satisfy consumers' demand for refined products."

Public hearings expected

Kalk said the commission is reviewing the application and that at least three public hearings will be held in communities along the pipeline's proposed route in North Dakota.

The project is being proposed in the wake of a recent pipeline break in the same area. That pipeline, operated by Tesoro Corp., spilled more than 20,000 barrels of oil in a wheat field near Tioga, where the new pipeline would start.

"Given the length of the pipeline project and the recent incident, there will be higher public awareness," Kalk said.

The Tesoro spill was discovered by a farmer in September and exposed that state regulators had known about the spill but failed to notify the public for several days.

Enbridge operates about 50,000 miles of pipelines in North America, and several hundred miles of pipelines in North Dakota, including one that runs between Minot, N.D., and Clearbrook, Minn. The line, built in 1962, has the capacity to ship 210,000 barrels of North Dakota crude daily, or about 8.8 million gallons.

Much of the proposed pipeline's route follows existing pipeline corridors, and 96 per cent of the required right-of-way easements have been obtained from North Dakota landowners, the company said.