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Canada Approves Enbridge Pipeline Flow Reversal

Enbridge got the go-ahead to reverse the flow of a pipeline that stretches across Canada. The National Energy Board of Canada approved the company’s plan to reverse the flow of its pipeline, which would send 300,000 barrels of crude oil per day from Ontario to Montreal.

This will be the second change in direction, and oil will flow East as it did originally. The Line 9 pipeline originally flowed from East to West, but that was reversed in the 1990’s to bring imported crude oil from overseas to Canada’s western provinces. Over the last decade, however, as Canada’s oil sands output surged, prompting a greater need for infrastructure to bring the heavy oil to market. Thus, Enbridge now hopes to send oil back East to refineries there.

"The board's decision enables Enbridge to react to market forces and provide benefits to Canadians, while at the same time implementing the project in a safe and environmentally sensitive manner," the NEB said in a statement. Environmental groups oppose the project, arguing it poses safety and environmental risks to communities in its path.

Related Article: New Report Finds Oil Sands Production Costs Below U.S. Tight Oil

The $110 million overhaul is also an effort for Canada to diversify its markets. An overreliance on the United States to the south has led to bottlenecks and a glut of oil on the Canadian side of the border. The rapid increase in oil production coming from the Bakken also made it tough for Canada’s oil to reach American markets. Canadian heavy oil regularly trades at a steep discount relative to the Brent or WTI benchmark, owing to an inability to get its oil to market. Sending oil to the East Coast of Canada will provide an outlet.

TransCanada also hopes to build a pipeline from West to East. The $12 billion pipeline, if it goes forward, would not be completed until the end of this decade or so.

By Charles Kennedy of Oilprice.com



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