Enbridge proposes Southern Lights pipeline

Energy and pipeline company Enbridge Inc. is proposinga $920-million US project to import light oils necessary to transportheavy oil and bitumen produced inAlberta's oilsands.

The Southern Lights Pipelinewill bring 180,000 barrels a day (b/d) of diluent light hydrocarbonsthat are becomingscarce in Alberta but are relatively plentiful in the U.S. from the Chicago area to Edmonton.

The proposed line involvesnew construction andchanges to Enbridge's existing crude oil pipelines, the company said Tuesday.

"It will assist in ensuring adequate supplies of reasonably priced diluent to support growth in heavy oil production, and will improve the efficiency and utilization of our existing mainline system," Enbridge president and CEO Patrick Daniel said in a statement.

The company is looking for support from both potential diluent shippers and users of its crude oil mainline system, because part of the Southern Lights system will require changes to themainline.

Diluent shippershave already expressed interest, Enbridge said.

It forecasts demand for imported diluent could reach 300,000 b/d by early in the next decade. The new line, combined with Enbridge'sproposed Gateway link, will meet the need, the company said.

The proposed Gateway project willmove oil from Edmonton to Kitimat, B.C., and condensate the other way.

Southern Lights involves:

• Building 1,085 kilometres of pipe from the Chicago area to Clearbrook, Minn.
• Reversing the flow ofEnbridge's line from Clearbrook to Edmonton.
• Buildinga new line tocarry 185,000 b/d of light sour crude oil from Cromer, Man., to Clearbrook.

If all the changes are made, the capacity to ship light crude from Edmonton to the U.S. Midwest will increase by 45,000 b/d, the company said.

Southern Lights could be in use in 2009 if itwins adequate commitments from shippers and getsengineering, environmental, public consultation and regulatory approvals.

Enbridge shares finished up 82 cents at $33.52 on the TSX.