Friday, May 22, 2015
While you were reading the Keystone XL pipeline headlines, the real pipeline from Canada to the Gulf Coast was completed...
For the past few years, the nation's attention has been focused on the controversial Keystone XL project. This 1,150-mile proposed pipeline would run from Alberta, Canada to Steele City, Nebraska. Around 830,000 barrels of oil per day would be shipped through the pipes. This oil would then flow through connecting pipelines to ultimately make its way to Houston, Texas and refiners on the Gulf Coast.
The Keystone XL would be just one of many pipelines carrying oil from Canada to Houston. However, this pipeline's capacity and direct route make it appealing to oil companies on both sides of the border.
But heavy criticism from environmentalists and politicians has caused approval of the project to be long delayed.
Meanwhile, another major pipeline project has quietly been completed. It's the first high-volume superhighway from Western Canada to the Gulf of Mexico.
And it shows why (despite any bad press) pipeline companies are some of my favorite investments right now...
The new pipeline system – created and co-owned by Enbridge and master limited partnership (MLP) Enterprise Products Partners – is made up of three giant new pipes... Line 67 (the "Alberta Clipper"), Flanagan South, and Seaway Twin.
The route begins in Alberta, Canada – where as much as 560,000 barrels of tar sand crude oil per day flows through Enbridge's Alberta Clipper pipeline to Superior, Wisconsin. Enbridge plans to upgrade this pipeline so it can carry 800,000 barrels per day.
The crude oil then goes to Pontiac, Illinois, where it goes through Enbridge's Flanagan South pipeline to the oil hub in Cushing, Oklahoma. This pipeline can carry 600,000 barrels of oil per day. Paired with Enbridge's parallel Spearhead pipeline, the two can move 750,000 barrels of oil per day.
Once the oil reaches Cushing, it moves over to Enbridge's and Enterprise's old Seaway pipeline or the new Seaway Twin pipeline. These pipes run from Cushing to Houston, Texas and can carry 850,000 barrels of oil per day. Once the oil reaches Houston, it is then distributed to oil refiners along the coast.
The whole system is incredible. These giant pipelines span thousands of miles of North America, from the boreal forests of Alberta all the way to the bayou country of Texas. It's estimated that the new system will double the amount of Canadian oil supplied to the Gulf Coast each day.
But this new pipeline system is just the beginning of a much larger infrastructure buildout in the U.S...
As regular Growth Stock Wire readers know, new drilling techniques have allowed U.S. oil production to surge in recent years. Oil production today is up more than 100% from the low in 2008. That's a massive increase in a short period of time.
And as we've shown in these pages before, these technologies will help U.S. oil production to keep soaring. We expect the U.S. to recover around another 300 billion barrels of oil in the years ahead. That's more oil than the U.S. has produced in the history of the oil industry AND all the oil reserves we have today.
To keep up with the massive amount of oil we'll produce in the coming years, the U.S. energy infrastructure needs a massive buildout. Investment bank Jefferies estimates the future annual funding requirement for this buildout is roughly $80 billion to $90 billion.
You see, an ample supply of oil is useless if you have no way to transport it to refiners and customers. So the U.S. NEEDS new pipelines. And despite any criticism you hear about pipeline systems, I expect we'll see more and more of them built over the next few years.
That means a massive amount of money is heading toward companies that operate pipelines in the U.S. – like Enbridge and Enterprise.
Pipeline companies are one of my favorite investments. We own several in the Stansberry Resource Report. Not only do these companies have a huge tailwind over the next few years, but they're also insulated from oil prices because they don't own oil. They just collect fees for transporting the oil. They're the "toll roads" of the energy industry.
As America's energy boom continues, these companies will profit. I suggest looking into names like Enbridge and Enterprise today.
You can find more of Matt's recent research here:
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