Enbridge Inc. (TSX:ENB)(NYSE:ENB) today announced that it has entered into an agreement to provide pipeline and terminaling services to the proposed Athabasca Oil Corporation ("AOC") Hangingstone Oil Sands Project (the "Hangingstone Project"). The Hangingstone Project will be the ninth oil sands project to be connected to Enbridge's regional system.
Enbridge will construct a new 50-kilometre (31-mile), 16-inch diameter pipeline from the Hangingstone Project to Enbridge's Cheecham Terminal, as well as completing modifications at Cheecham to support the incremental production. The project has an estimated cost of up to approximately $0.2 billion subject to finalization of scope, which will provide an initial capacity of 16,000 barrels per day (bpd) with provisions for expansion to accommodate up to a further 60,000 bpd from Phase 2 which is committed to the Enbridge regional system if sanctioned. The Phase I facilities are expected to be in service in the latter half of 2015.
"The attraction of the Hangingstone Project into our regional system confirms the competitive advantages of our existing asset base, reinforcing our expectations of additional growth from this segment of our business," said Stephen J. Wuori, President, Liquids Pipelines and Major Projects. "We're pleased to strengthen our relationship with AOC by delivering timely and innovative terminaling and transportation solutions for the development of their oil sands project."
Under the terms of the agreement, Enbridge will also provide pipeline transportation services to Edmonton on its Regional Oil Sands System for up to 16,000 bpd of diluted bitumen produced from Phase 1 of the Hangingstone Project. The initial term of the pipeline and terminaling agreement is 25 years, with AOC having the right to extend the agreement in successive five-year terms for a total contract life of 45 years.
Enbridge foresees filing an application with the Energy Resources Conservation Board (ERCB) and other regulatory authorities in May of 2013. Subject to the receipt of regulatory and environmental approvals, it is anticipated that the Project would begin right-of-way clearing in early 2014 and pipeline construction in the winter of 2014/2015.
Enbridge is committed to timely and meaningful dialogue with all stakeholders, including shareholders, customers, and employees, indigenous peoples, governments, regulators, and landowners, among others, regarding all of our projects, operations and activities. Enbridge will ensure this project is conducted in an environmentally responsible manner with a focus on the safety of our employees and the community.