Report Volume XXIII, Number 4, October 15th, 2011

INDUSTRY NEWS (Houston, TX) – Enterprise Products Partners L.P. through its Texas Express Pipeline LLC (”Texas Express”) subsidiary, recently announced the start of a binding open commitment period for available capacity on a new natural gas liquids (NGL) pipeline being developed by the company. The pipeline would originate from Skellytown, Texas in Carson County and extend approximately 580 miles to NGL fractionation and storage facilities in Mont Belvieu, Texas. The project is part of a recently announced joint venture that includes Enbridge Energy Partners, L.P. and Anadarko Petroleum.

The new Texas Express pipeline, in conjunction with the Mid- America Pipeline, will assist producers in West and Central Texas, the Rocky Mountains, Southern Oklahoma and the Mid-continent in maximizing the value of their natural gas production by providing additional takeaway capacity and enhanced access to the Gulf Coast NGL market. Initial capacity on Texas Express will be approximately 280,000 barrels per day (”BPD”), which can be readily expanded to approximately 400,000 BPD or more depending on shipper interest. The pipeline is expected to begin service in the second quarter of 2013.

“While the pipeline is anchored by long-term commitments, all interested parties will have an opportunity during the open commitment period to sign up for capacity on the system, which offers access to the largest domestic NGL market located along the Gulf Coast,” said A.J. “Jim” Teague, executive vice president and chief operating officer of Enterprise’s general partner. “Interest in the project has been very high. Producers find our project very appealing since it provides a lower-cost fee structure when compared to other announced projects. In addition, it gives them the opportunity to sculpt their volume commitments to match their production ramp-up while offering a one-time, future option to increase their volume commitment.”

INDUSTRY NEWS (Houston, TX) – Enterprise Product Partners is planning a pipeline to transport ethane from the Northeast’s booming Marcellus Shale region to the Gulf Coast’s petrochemical hub and launched an commitment period for potential customers Tuesday.

The 1,230-mile pipeline, a mixture of new construction and existing pipe, is expected to start operation in early 2014 with a capacity of 125,000 barrels per day, according to the Enterprise announcement.

It would move ethane, a natural gas liquid, through from Washington County, Pa. to Mont Belvieu, Texas. It would be the first feed from the Northeast to Enterprise’s Mont Belvieu storage complex, said company spokesman Rick Rainey.

Houston-based Enterprise seeks to capitalize on petrochemical producers’ growing demand for ethane, in massive supply from the Northeastern corridor, Rainey said. The petrochemical industry is increasingly turning to natural gas, from which ethane is derived, as a feedstock because of its lower price compared to crude oil.

During the open commitment period, shippers sign binding agreements to use the pipeline to move their products. The commitment period started Tuesday morning and will run through Nov. 10, Enterprise said.

Rainey said Enterprise has already received verbal interest from shippers and expects to get enough commitment to make the pipeline commercially viable. The company could expand the pipeline’s capacity if shipper interest exceeds current plans, he added.

The company is not releasing the project’s expected cost until the open commitment period closes, Rainey said.

Under current plans, Enterprise will build 580 miles of 16-inch pipe extending southwest from Pennsylvania to Cape Girardeau, Mo. There, it will connect with the existing TE Products Pipeline, extending 650 miles to Beaumont, Texas. That pipeline currently moves gasoline and diesel to the Northeast and it’s flow will be reversed to incorporate the new project, Rainey said.

Another 55 miles of pipe will be constructed to connect Beaumont to the Mont Belvieu natural gas liquids storage complex, according to the Enterprise announcement. The complex will provide direct or indirect access to every ethylene plant in the United States, the company said.

INDUSTRY NEWS (Houston, TX) – Enterprise Products Partners LP and Enbridge Inc. plan to build a 500-mile pipeline to move crude from a bottleneck at Cushing, Oklahoma, to refineries on the U.S. Gulf Coast.

The proposed Wrangler pipeline will be capable of moving as much as 800,000 barrels a day and may be in service by mid-2013, the companies said in a statement today. Bart Moore, a spokesman for Houstonbased Enterprise Products, declined to say how much the project would cost.

The pipeline represents the first step in an effort by Calgary-based Enbridge to bring Canadian crude to the Gulf, Mark Chevalier, a senior consultant with Purvin & Gertz Inc., said in an interview today. The system would compete with TransCanada Corp.’s proposed $7 billion Keystone XL pipeline, which would also take crude from Alberta’s oil sands to Texas refineries. “What they’re trying to do is dominate that route to push all the other pipelines out,” said Paul Euseppi, an analyst with Dallas-based Swank Capital LLC, which manages about $1.5 billion and including stock in Enterprise and an Enbridge subsidiary. The pipeline may cost more than $1 billion, he said. Technology to produce crude from U.S. shale-rock formations and Canadian oil sands has increased production and led to a glut at the Cushing storage hub. A lack of pipeline capacity to move the petroleum to refineries has caused the price of West Texas Intermediate crude, the U.S. benchmark, to trade at almost $27 less per barrel than imported oil.

Earlier Pipeline Plan – Enterprise Products called off a previous plan to build a Cushing-to-Gulf pipeline with Energy Transfer Partners LP on Aug. 19 after the proposal failed to draw sufficient commitments from shippers.

The difference between the two plans is Enbridge’s ability to attract interest from oil producers in Canada for a complete line originating in Alberta, Purvin & Gertz’s Chevalier said.Enbridge announced in August that it is considering building a “Monarch North” pipeline that could move crude from Chicago to Cushing, as well expanding its existing ability to deliver oil from Alberta to Chicago.

Oil Sands Surge – The proposal may affect other pipelines between Cushing and the Gulf Coast. ConocoPhillips, which owns the Seaway pipeline jointly with Enterprise, may be pressured to reverse the line or sell its share, Bradley Olsen, a Houston-based analyst with Tudor Pickering Holt & Co., said in a note to clients.

“The cost of a Seaway reversal would be substantially lower than the new Wrangler pipeline,” said Olsen, who rates Enterprise’s units at “accumulate” and owns none. Production from Alberta’s oil sands is expected to double to more than 3.7 million barrels a day by 2025, according to the Canadian Association of Petroleum Producers. The Keystone XL, which is awaiting U.S. State Department approval because it crosses an international border, was intended to address that increase when it was proposed in 2008. The project is opposed by some environmentalists and landowners.

INDUSTRY NEWS (Houston, TX) – A section of oil pipeline that runs through Cass County could be replaced in 2012.

Enbridge, a Canada-based oil pipeline company, is planning a maintenance and rehabilitation effort along parts of its Line 6B pipeline, which starts in Griffith, Ind., crosses through the Niles area and into southeast Michigan.

Pending obtaining the required environmental permits and regulatory approval, the company would replace about 75 miles of the pipeline, including a five-mile stretch just southeast of the city of Niles, according to Joe Martucci, Enbridge community relations consultant.

Martucci said the company is waiting on approval from the Michigan Public Service Commission. If it gets approval, the company would start construction in 2012.