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Share this Story: Enbridge purchases Moda Midstream for US$3Billion raises questions about the terminal for Canadian producers
Enbridge's purchase of Moda Midstream for US$3Billion raises concerns about Canadian producers. Enbridge's deal with Texas expands its footprint in the heartland of the largest U.S. oilfield. Photo by Nick Oxford/Reuters file.
Article content North America's largest pipeline company CALGARY Enbridge Inc. is investing US$3B to purchase North America's largest oil export terminal. This will allow it to expand its customer base among Texas oil producer. However, there are questions about the future design of an export terminal for Canadian oil producers.
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Article content Enbridge President and CEO Al Monaco stated that they are excited to acquire North America's premier, very large crude carrier, (VLCC), capable crude export terminal. The deal was announced Tuesday by San Antonio-based EnCap Flatrock Midstream, which will buy Moda Midstream Operating LLC, and its Ingleside energy Centre port near Corpus Christi, for US$3billion in cash. This video is not loading. We are sorry.
Tap here to view other videos by our team. Refresh your browser. Enbridge's US$3B Moda Midstream purchase raises concerns about Canadian producers. Back to video Ingleside is the largest crude oil export terminal on the continent. It can move 1.5 million barrels per day from the U.S. Gulf Coast. It can store 15.6 millions barrels of oil. Enbridge, a Calgary-based company, has expanded its footprint in Texas thanks to the deal. The pipeline giant also purchased the Viola pipeline at 3000,000-bpd, a 20% stake in the Cactus 2 pipeline at 670,000-bpd and a storage terminal that will transport oil from West Texas' prolific Permian Basin to export markets.
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Article content The new Enbridge Ingleside terminal is crucial to capitalize on North America's energy advantage because it is close to world-class Permian resources and has a cost-effective and efficient export infrastructure. Monaco released a statement. Enbridge has released a map that shows the proximity of the Ingleside facility with its existing pipelines. These include Flanagan South, Seaway Twin and Seaway Twin which move heavy oil from Canada and the Gulf Coast. However, analysts believe the Ingleside facility will be used primarily to export crude oil from Texas because of its geographic location. The company stated that Ingleside does not connect to existing assets, but provides a light value chain with competitive advantages and sustainable connections. It is expected that the bulk of North American crude oil exports will come from light barrels made from Eagle Ford and Permian. However, estimates suggest that the Permian could account for around 80 percent of U.S. crude exports by 2035.
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Article content Enbridge was also working with Enterprise Products Partners LP in building the Sea Port Oil Terminal. Analysts now wonder how fast Enbridge will complete that project which would directly serve heavy oil producers in Western Canada following Tuesday's Ingleside deal. National Bank analyst Patrick Kenny said Tuesday that Enbridge's commitment to financing the SPOT terminal may be limited given Tuesdays purchase of the Ingelside terminal. SPOT, a proposed 2,000,000 bpd export terminal located in Houston, is connected to Enbridges existing southbound pipelines FlanaganSouth and Seaway Twin. It is designed to handle both heavy oil and light oil exports and makes it an ideal facility for Western Canadian oil producers. It is expected that the company will approve the project in 2021's second half.
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Article content Kenny described Tuesday's purchase of Ingleside as a continuation to Enbridges buy-over/build crude oil export growth plan. Enbridge has also received regulatory approvals to expand Ingleside to ship 1.9million barrels per day and to expand shipping berths to accommodate Suezmax crude oil tankers. John Coleman, Wood Mackenzie's Houston research director, stated that the Ingleside terminal at Corpus Christi can export crude oil almost exclusively from Texas' Permian, Eagle Ford oil fields. They will have a stronger presence in the region that is expected to be the lowest growth for oil supply in the Lower 48. Coleman stated that the Permian Basin really is the only growth region for the Lower 48. It's a good place to start if you want to grow your long-haul presence.
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