EXPANSION OF THE LAKEHEAD SYSTEM PROGRESSES

With U.S. demand for Canadian crude oil forecast to increase to meet market needs, the Partnership and Enbridge affiliates are continuing design and construction of Lakehead System expansions:

 

	New 42-inch pipe is delivered to Southern Access right-of-way near Portage, Wis. The expansion project will bridge western Canadian oil supply with U.S. refinery demand.

• Southern Access

The first stage of construction on our Southern Access Expansion project—a new pipeline paralleling our existing system between Superior, Wis., and Delavan, Wis.—is anticipated to be completed in the first quarter of 2008 and will add about 190,000 bpd of capacity to the system. The second stage—Delavan to Flanagan, Ill.,—is expected to be completed in 2009 and, in combination with the first stage, will create a 454-mile pipeline with approximately 400,000 bpd of incremental capacity on the Lakehead System.

Regulatory review and field surveys were under way in late 2007 for Enbridge’s Southern Access Extension project. This 36-inch diameter, 400,000-bpd pipeline would provide an additional interconnection from the Lakehead System at Flanagan to a crude oil pipeline hub at Patoka, Ill. Although this is an Enbridge affiliate project, the Lakehead System is expected to benefit from incremental volumes moving through our system to connect with this system.

Further, Enbridge and ExxonMobil Pipeline Company are seeking shipper commitments for a proposed 30-inch diameter, 768-mile crude oil pipeline from Patoka to Nederland, Texas, as well as a connecting 24-inch diameter, 88-mile pipeline from Nederland to the Houston area refining corridor. If constructed, the proposed Texas Access Pipeline would provide incremental takeaway from the Patoka Hub, which receives crude oil deliveries from several pipelines including the Mustang Pipeline, in which an Enbridge affiliate holds a 30 percent interest, as well as potential volumes that could flow from the Lakehead System to the Patoka Hub through the Southern Access Extension project.

• Alberta Clipper

Along with Enbridge, the Partnership is developing the Alberta Clipper project, a 36-inch diameter, 1,000-mile heavy crude oil pipeline from Hardisty, Alberta, to Superior. The Partnership will construct approximately 330 miles of this new pipeline from the international border near Neche, North Dakota, to Superior. In 2007, plans for this project were upgraded to include a delivery connection at Clearbrook, Minn., as well as an additional tank at Superior. Expected to be in service by mid-2010, the Alberta Clipper pipeline will have an initial capacity of 450,000 bpd, which will be expandable up to 800,000 bpd with the addition of more pumping stations. Complementary capacity on the Southern Access 42-inch pipeline from Superior to Flanagan will be available through additional pumping stations. The cost of the Partnership’s share of the Alberta Clipper project is approximately $1 billion (in 2007 dollars excluding capitalized interest).