Enbridge Pipelines will expand the tankage of its mainline terminal at Edmonton, Alberta, by one million barrels of oil at an estimated cost of approximately $260m.

The expansion will be undertaken under the terms of the 2010 Incentive Tolling Settlement between the company and the Canadian Association of Petroleum Producers (CAPP).

Enbridge said it has received a letter of support from CAPP to undertake the project.

The expansion, which is targeted for completion by late 2012, is required to accommodate growing oil sands production receipts both from the company’s Waupisoo Pipeline and other non-Enbridge pipelines.

The expansion will be conducted over two phases and consists of the construction of four tanks in the North Terminal and the installation of short segment of pipeline and related infrastructure.

Subject to regulatory approval, construction will commence early in 2011, and Phase I is expected to be in service in the third quarter of 2012 while Phase II in the fourth quarter of the same year.