Tuesday, March 26, 2013

FERC Rulings Add Uncertainty to Pipeline Plans

Two decisions by the Federal Energy Regulatory Commission (FERC) last week raised uncertainty about the prospects for two pipeline projects proposed for the Williston Basin.

In the first decision, FERC rejected the rate plan for the $2.2 billion Enbridge Sandpiper pipeline that would carry Bakken oil from western North Dakota to Superior, Wis. where it would be transported on existing pipelines to refinery hubs in the United States and eastern Canada. Enbridge had applied to FERC for authorization to add a surcharge to the existing rate for transporting oil as a way to recover construction costs. FERC's ruling sided with refiners who argued that the surcharge would have improperly shifted the risks related to the project away from the pipeline owner. FERC concluded its ruling by encouraging Enbridge to submit a new rate plan, which Enbridge has indicated it is going to do. More

In the second case, FERC dismissed a complaint against Enbridge filed by High Prairie Pipeline. The complaint alleged that Enbridge improperly denied High Prairie's request for a interconnection to the Enbridge origin point in Cleabrook, Minn. In its ruling FERC determined that the two parties were still negotiating the interconnection request and that no final decision had been made by Enbridge. FERC encouraged the negotiations to continue. More

Enbridge's proposed 500-mile Sandpiper pipeline would originate in the Beaver Lodge area in North Dakota (south of Tioga) and would have a capacity of approximately 225,000 barrels per day. The company originally stated that the pipeline would  be operational no sooner than 2015 when the project was announced in October 2012 and has stated the FERC ruling will not delay the schedule. 

The High Prairie Pipeline, to be constructed by Saddle Butte Pipeline, LLC, would begin north of Alexander, N.D. in McKenzie County and end near Clearbrook, Minn. Two lateral pipelines would be connected, one each in McKenzie and Mountrail counties. The project would increase Saddle Butte's capacity by 150,000 barrels per day. 

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