Company (URC) has entered
into an agreement concerning Line 10, a pipeline owned by
Enbridge, which transports crude oil from Canada to
URCs Kiantone Pipeline in West Seneca, New York and
serves its refinery
in Warren, Pennsylvania.
We are very pleased that our companies have agreed to a
plan that would allow Enbridge to continue to provide
and efficiency to Line
10," said John A. Catsimatidis, CEO of URC. "The agreement
will allow us to consider the feasibility of expansion
of the pipelines
capacity over the coming years subject to regulatory
"The agreement underscores our commitment to safe, reliable,
low cost transportation of our crude oil feed stocks for
decades to come," he added. "After completion of the segment
replacement program, it is our expectation that Line 10 will
be restored to its original operating capacity.
The deal provides for URC to fund certain integrity costs
necessary to maintain Enbridges Line 10 pipeline and
also a commitment to pay for half of the cost of the
replacement of 20 miles of pipeline in Canada. URCs
share of the replacement cost of this section of the pipeline
will be approximately $28 million.
It also provides for the replacement and upgrade of
additional portions of Line 10, subject to regulatory
approvals, and provided that a put and call
agreement concerning ownership of the pipeline is entered
into by the end of the year.
If the parties enter into the put and call
agreement, URC and Enbridge would share the cost of replacing
the majority of Line 10 in Canada and part of it in New York
State. Each party would invest approximately $135 million
over the next five or six years for pipe replacement.
URC will repay Enbridge for its investment over a ten year
period for each section of Line 10 that is replaced. URC
would have the right to purchase (call) the entire Line 10
from Enbridge at any time during the next 11 years and
Enbridge will also have the right to require URC to purchase
Line 10 (put) over a two-year period starting at the later of
nine years or when all of the upgrades are completed.
The agreement states that URC will pay Enbridge the published
toll for the transportation of hydrocarbons and backstop the
capital and integrity costs while Line 10 is owned by
Enbridge. Promptly after execution of the agreement, URC will
pay Enbridge $36 million for integrity costs for 2014.
of the first segment
of the pipeline to be replaced is planned to begin in 2015.