Seaway Crude Oil Pipeline Company LLC –– a 50/50 joint venture between the affiliates of Enterprise Products Partners L.P (EPD - Free Report) and Enbridge Inc. (ENB - Free Report) –– announced that the Seaway pipeline will commence operations at full rates towards the end of next week. The pipeline runs between Cushing and the U.S. Gulf Coast.
Currently, operations on the Seaway pipeline remain suspended for the completion of the final work, which includes the completion of the remaining pump station connections. The capacity of the 500-mile, 30-inch diameter pipeline is being raised to 400,000 barrels per day from about 150,000 barrels per day.
The expansion of this major pipeline is an effort to alleviate the obstacles faced by shippers at Cushing, Oklahoma. The shippers were facing a bottleneck in transporting the increasing inland U.S. oil yield to more lucrative markets on the U.S. Gulf Coast.
Enterprise Products Partners is the operator of the project, while Enbridge acquired its stake from ConocoPhillips (COP) in November 2011. Enterprise Products Partners and Enbridge finished the reversal of the Seaway Pipeline in May 2012.
Additional pipelines are being constructed to facilitate shippers to use Enterprise’s ECHO crude oil storage facility in southeast Houston and the Port Arthur/Beaumont refining complex. These form part of the Seaway reversal and expansion projects.
Enterprises' assets include 50,200 miles of onshore and offshore pipelines, approximately 192 million barrels of storage capacity for Natural Gas Liquids (NGL), refined products and crude oil, and 27 billion cubic feet of natural gas storage capacity.
Enterprise Products Partners holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation.