Enbridge has completed its $12.4 million purchase of the remaining 10% of the Spearhead Pipeline it did not already own from BP Pipelines North America Inc. The company will now execute its plan to reverse the pipeline's traditional flow to send crude oil south.
Enbridge bought a 90% interest in the Spearhead pipeline system from BP Pipelines in 2003 for $110 million. With the addition of the final 10% to gain total ownership, the overall purchase price amounted to $124.4 million. Enbridge now owns 100% of the Spearhead facility.
Enbridge intends to reverse the flow of the pipeline to transport Canadian crude oil south from the company’s mainline system at Chicago to the storage and refining hub at Cushing, Oklahoma. The existing 650-mile pipeline has historically operated in south-to-north service, but recently has been largely inactive. Enbridge has now received all necessary approvals and will expedite work on the reversal.
The company said that it expects to have the line in service during the first quarter of 2006, with an initial capacity of 125,000 barrels per day. The line could subsequently be expanded to accommodate up to 160,000 barrels per day.
The Spearhead Pipeline exemplifies our strategy of creating additional value for our shippers by extending the reach of our pipeline system to new markets throughout the continental US, said Enbridge’s president & CEO, Patrick Daniel. And by reversing an existing pipeline, we can create a new oil transportation option that we can bring on stream for far less than the cost of a new pipeline.