With pipelines at a premium, fossil-fuel companies get creative
This is interesting: Pipeline company Enbridge wants to turn a natural-gas pipeline in the Midwest into a crude-oil pipeline. From The Globe and Mail:
The latest proposal would redeploy a variety of existing pipelines, including part of Energy Transfer’s Trunkline natural gas system, as well as Enbridge’s new Southern Access Extension, which is under development. …
The proposal is one of several initiatives being considered to move more crude from the U.S. Midwest and Canadian Prairies to refineries along the coast of the Gulf of Mexico.
Canadian crude is currently being sold at a bigger discount than usual because of a lack of pipeline capacity and growing supplies from North Dakota and other states that are expanding output using advanced drilling methods.
That “lack of pipeline capacity” from the north will also be discussed this Sunday in Washington.
There are all sorts of interesting economic aspects to this, about the glut of oil and gas from North Dakota and rising natural-gas prices. But we mainly want to note that converting a natural-gas pipeline to one that transports oil is a smart move for Enbridge. If the company has a pipe that it knows doesn’t leak, it ought to run with it.