Sandpiper Pipeline Gains Anchor Shipper

By The Bakken Staff | December 26, 2013

The nation’s fourth largest refiner, Marathon Petroleum Corp., has become an anchor shipper for a major Bakken pipeline system currently under development. MPC has agreed to fund 37.5 percent of the Sandpiper Project, a 610-mile interstate crude oil pipeline planned by Enbridge Pipelines LLC. The $2.6 billion pipeline now has the anchor shipper needed to solidify the future of the project. MPC’s commitment demonstrates “the economic attractiveness of establishing a low-cost reliable pipeline solution for Bakken producers to access the premium North American markets for light crude oil,” said Stephen Wouri, president of Enbridge Liquids Pipelines. 

In return for the 37.4 percent funding agreement, MPC will receive 27 percent equity interest in the North Dakota system, with the potential to own 30 percent. When complete in 2016, the pipeline will be capable of moving between 225,000 to 580,000 barrels per day. 

The Sandpiper is only one part of Enbridge’s Light Oil Market Access Program, a plan designed to move light oil from western Canada and the Bakken oil play of North Dakota to markets in eastern Canada or the U.S. Midwest. The Southern Access Extension Pipeline will move crude from Flanagan, Ill., to the Patoka, Ill., Oil Hub. In 2012, MPC agreed to be the anchor shipper for the Southern Access Extension Pipeline. 

For Mike Palmer, senior vice president of supply, distribution and planning for MPC, the Sandpiper Project will help to provide needed transportation of oil out of the region. The shipping agreement also highlights MPC’s commitment to shale energy and the growth of its midstream logistics business. The company has also made investments in other shale plays, including the Utica Shale, to move crude oil and condensates. The company currently operates seven refineries in the U.S., sells gasoline at roughly 5,100 retail outlets and owns Speedway LLC, a subsidiary that represents the fourth-largest convenience store chain in the U.S. 

Marathon Oil, an independent energy exploration and production company operating in the Williston Basin, was formerly part of a broader energy company, Marathon. 

Although MPC has signed on as the anchor shipper for the Sandpiper Project, an open season will take place to allow other potential shippers to enter into capacity commitments. And, a portion of the pipeline’s capacity will remain reserved for uncommitted shippers.