Enbridge and Exxon Push Ahead with New Pipeline Project

Exxon Mobil Corp. (XOM) and Enbridge Inc. (ENB) said they would begin receiving binding capacity commitments from customers on Wednesday night for their $3-billion Clydesdale oil pipeline from Illinois to Texas.

The partners are expected to decide in early 2008 whether they will go ahead with the extension of Enbridge’s system to bring production from Alberta’s oil sands to the massive refining capacity in the U.S. Gulf Coast region.

Desjardins Securities analyst Daniel Shteyn tried to decifer Enbridge boss Pat Daniel’s comments to the media, and said they could be interpreted in several ways.

Enbrige may be ahead of competing pipeline projects like one from TransCanada Corp. (TRP), and ConocoPhillips (COP), and another from Kinder-Morgan Energy Partners (KMP), and the Transmission Expansion Planning Policy Committee [TEPPC], he told clients in a note.

However, another possibility is that Enbridge is jockeying for support from shippers “in order to pre-empt further progress on the other projects.”

Regardless, Mr. Shteyn thinks this is a positive development given expectations that Enbridge has the cheapest toll and fastest time-to-market.

The analyst has incorporated the Clydesdale pipeline into his valuation and rates Enbridge a “buy” with a price target of C$44.50.

XOM vs. ENB vs. TRP vs. COP vs. KMP 1-yr chart: