CHICAGO An Enbridge Inc. subsidiary has formed a joint venture with Canopy Prospecting Inc. to develop rail capacity that would deliver crude oil from the Bakken shale in North Dakota to refineries in Philadelphia.
Enbridge Rail (Philadelphia) LLC and Edgemont, Pa.-based Canopy will together create Eddystone Rail Co. and related pipeline and storage infrastructure near Philadelphia, the two companies said Monday.
Enbridge, which will hold a 75-percent stake in the joint venture, estimated total capital costs of about $68 million and predicted the project would be in service by the third quarter of 2013, pending regulatory and other approvals.
"Rail is the fastest way to provide increased export capacity out of the Bakken, creating a near-term solution to transportation bottlenecks," Enbridge Inc. liquids pipelines president Stephen J. Wuori said in a statement.
The Bakken shale, which underlies North Dakota and parts of Canada, has seen a boom in oil drilling, but pipeline infrastructure has been slow to catch up to the relatively new energy play. That has resulted in more rail, instead of traditional pipelines, being used to take oil away from the region to consumption hubs elsewhere (amm.com, June 12).
The Eddystone project will also help boost U.S. employment by bringing domestically produced crude oil to "once idle or under-utilized" refineries in the eastern half of North America that have historically dependent on "more expensive foreign imports," Wuori said.
The Philadelphia area is second only to Houston in crude oil refineries, and Eddystone will be among the largest rail suppliers of North Dakota Bakken crude to the area, Canopy president Jack Galloway said in a statement. "Eddystone will be the first to provide access directly to those refineries from a rail facility."