Enbridge has entered into a Letter of Intent with Chevron USA, Inc., Statoil Gulf of Mexico LLC and Marubeni Oil & Gas (USA) Inc. to construct and operate an oil pipeline from the proposed Big Foot ultra deepwater development in the Gulf of Mexico. This proposed crude oil pipeline project is complementary to Enbridge's previously announced plans to construct the Walker Ridge Gathering System, which will provide natural gas transportation for the proposed Chevron-operated Jack, St. Malo and Big Foot fields.
The estimated cost of the Big Foot Oil Pipeline, which will be located about 170 miles south of the coast of Louisiana, is approximately US $250 million. Combined with the Walker Ridge Gathering System project, the proposed oil pipeline would bring the total Enbridge investment for the projects to US $750 million.
"The Big Foot Oil Pipeline reinforces Enbridge's presence as the leading pipeline services provider in the deepwater Gulf of Mexico region," said Patrick D. Daniel, President and Chief Executive Officer, Enbridge Inc. "We are particularly pleased with our expanding relationship with Chevron, one of the major operators in the region, and our growing oil pipeline business in the deepwater region, which has substantial production growth potential. Like the Walker Ridge Gathering System, the Big Foot Oil Pipeline will have investment risk and return characteristics comparable to Enbridge's normal business model."
Added Mr. Daniel, "The Big Foot Oil Pipeline and Walker Ridge Gathering System projects further complement Enbridge's strong portfolio of commercially secured projects and support our expectation that we will be able to extend our 10 per cent plus 2008-2013 average growth rate at a similar rate well beyond 2013.
"Enbridge has ample financial capacity to fund the equity component of the combined $750 million investment in these two offshore projects from internally generated cash flow and surplus balance sheet equity, as well as to accommodate additional opportunities which we have under development."
The Big Foot Oil Pipeline will consist of approximately 40 miles of 20-inch diameter pipe at depths of up to 5,900 feet, and will have capacity to transport up to 100,000 barrels per day. Big Foot will deliver to a sub-sea connection on existing deepwater pipeline infrastructure.
Enbridge offshore pipelines transport about 40 per cent of all deepwater Gulf of Mexico natural gas production and include joint venture interests in 12 transmission and gathering pipelines in six major pipeline corridors in Louisiana, Mississippi and Alabama offshore waters of the Gulf of Mexico. The system moves on average approximately 30 per cent of the Gulf of Mexico natural gas production at a rate of 2.5 billion cubic feet per day.
Additionally, Enbridge operates -- in Canada and the United States -- the world's longest liquid petroleum pipeline system, which delivers more than 2 million barrels per day of crude oil and liquids primarily from reserves in Western Canada to refining centers in the Midwest and Ontario, Canada.
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