Enbridge Signs GoM Pipeline Deal

• By Zacks Equity Research
• On 1:09 pm EDT, Wednesday October 7, 2009

Calgary-based Enbridge Inc. (NYSE: ENB - News) recently announced that it reached an agreement with subsidiaries of U.S. oil major Chevron Corp. (NYSE: CVX - News), Norway’s StatoilHydro ASA (NYSE: STO - News) and Japan’s Marubeni Corp. to construct and operate a 40-mile, 20-inch oil pipeline from the proposed Big Foot ultra deepwater development in the Gulf of Mexico.

 

The planned conduit is estimated to cost approximately $250 million and will transport about 100,000 barrels of oil per day to a subsea connection on existing deepwater pipeline infrastructure. It will be located approximately 170 miles south of the Louisiana coast and reach depths of up to 5,900 feet below water.

 

The proposed Big Foot pipeline will complement Enbridge’s previously announced plans to build the Walker Ridge offshore natural gas pipeline in the area for $500 million. Thus the company has committed a total of $750 million in pipelines to service oil and gas exploration from the Gulf. Enbridge said that the equity component of the projects will be financed through internally generated cash flow and surplus balance-sheet equity.

 

We believe the Big Foot deal will further strengthen Enbridge’s position as the leading pipeline services provider in the deepwater Gulf of Mexico region, which has substantial production growth potential. Together with the Walker Ridge development, this will also ensure the extension of the company’s 10 percent-plus average growth rate well beyond 2013.

Enbridge, a Canadian company, is a leader in energy transportation and distribution in North America and internationally. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world's longest crude oil and liquids pipeline system. The company also has international operations and a growing involvement in the natural gas transmission and midstream businesses. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State.

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