By 2014 the United States of America will overtake Russia in liquids production, which is estimated to hit 11 million barrels per day versus 10.86 million bpd for Russia. But the bigger question is how will America move 40 billion barrels a year?
Well up north Enbridge Energy Partners (NYSE: EEP) is lending a helping hand with several projects coming up. The Bakken is seeing booming production, and someone has to be able to transport all that oil to the refineries.
Enbridge Energy Partners is building a 225,000 bpd pipeline from the Bakken to Clearbrook, Minnesota. From Clearbrook, Enbridge Energy Partners is building a 375,000 bpd pipeline to Superior, Wisconsin. Both of these projects will be done around 2016 and will allow oil from the Bakken to reach refiners out east.
In order to make sure as much oil as possible is hooked up to Enbridge Energy Partner's pipelines, it is building a 100,000 bpd regional access system which will come online in the third quarter of 2013.
In Cushing, Oklahoma, there has been a glut of oil because of the huge amount of production that has come online. For America to get it out of there, something big is needed, which is exactly what Enbridge Inc (NYSE:ENB) and Enterprise Products Partners (NYSE:EPD) have planned.
The Seaway Pipeline (a 50/50 JV) currently transports oil from Cushing, Oklahoma, to a refining complex in the Freeport, Texas area. As of now the pipeline carries 400,000 bpd, but that's not enough to carry all of America's new output. So these two companies are going to increase that capacity by 450,000 bpd.
This will provide much relief for Cushing, because every investor knows it doesn't have unlimited storage capacity. But more needs to be done to fill the needs of the new energy dynamic in America.
All the way from Appalachia
Enterprise Products Partners knows that 11 million barrels a day won't move itself, and has decided to take it upon itself to continue to boost capacity. In the Utica and Marcellus shale, booming producing needs to be transferred to the right refineries.
In order to move that output Enterprise Energy Partners is going to build/connect a massive 1,230 mile pipeline all the way from Pennsylvania to Texas. The ATEX pipeline will be able to carry 190,000 bpd and is a combination of connecting existing pipelines and building new ones. The purpose of the pipeline is to carry ethane (an NGL) to the refining market in Texas. This pipeline should come online in the first quarter of 2014.
There is so much oil even foreign companies are getting in on the action. TransCanada (NYSE:TRP), the same company trying to build the contentious Keystone XL pipeline, is currently building a 700,000 bpd pipeline from Cushing to Texas with the potential to increase capacity to 830,000 bpd.
This will significantly reduce the glut in Cushing and enable crude oil to reach the refiners it should be going to. When the maximum amount of crude is going to refineries, it enables them to run at maximum capacity and put downward pressure on gasoline prices. For America as a whole, we will all benefit (personally I don't mind paying less for gas...).
These are just a few of many pipelines being built or converted to fit the needs of a new America, an America with growing energy production. All of these pipeline operators will reap long-term benefits from their investments as the increased capacity turns into increased cash flow. This gives them more money to invest back into the business and continue the monumental task of moving so much oil.