The original capacity of the pipeline will be 150,000 barrels/day, with expansion planned to exceed 400,000 barrels/day by the first part of next year. If a “loop” or second, parallel pipeline is added, the total capacity of Seaway will reach 850,000 barrels/day by 2014. The Seaway pipeline is one of several proposed crude oil pipelines that would carry crude from North Dakota, Montana, and Alberta to the US Gulf Coast, where crude prices are higher.

Transcanada Corp. (NYSE: TRP) has filed a new proposal for its Keystone XL pipeline, while Oneok Inc. (NYSE: OKE) and Oneok Partners LP (NYSE: OKS) have proposed a 1,300 mile route from North Dakota to Cushing, while Enbridge Energy Partners LP (NYSE: EEP) and parent Enbridge are proposing new and reversed pipelines to move crude to Cushing.

Crude from the Bakken oil play and the Canadian oil sands sells at a steep discount to Brent crude, which sets the price benchmark on the Gulf Coast. Producers hope to boost the price they get for their crude if they can just get the black stuff to more liquid market. For consumers, closing the price differential will very likely mean higher prices.

Paul Ausick

In addition to blasting the current development plans, the report also attacks plans to export the oil by pipeline either to the West Coast, the US Gulf Coast, or the East Coast. In the US, the most well-known of the proposed pipelines is the Keystone XL being proposed by TransCanada Corp. (NYSE: TRP). Kinder Morgan Inc. (NYSE: KMI) has also proposed to reverse the flow of its Trans Mountain pipeline system to transport crude from Edmonton to near Vancouver and Enbridge Inc. (NYSE: ENB) has proposed a new pipeline (the Northern Gateway) that would transport crude to Kitimat, British Columbia. From either destination, crude would be loaded on ships for distribution to buyers.

Enbridge is also proposing to reverse the flow of its Trailbreaker pipeline system to transport Albertan oil that currently arrives at the terminus of the system in Sarnia, Ontario, to Enbridge’s terminal in Portland, Maine, where the crude would be either put on ships for global export.

A report at CNBC.com details some of the objections that the environmental groups have raised related to the proposed pipelines, most thoroughly in a February 2011 report called “Tar Sands Pipelines Safety Risks.” These objections include claims that the crude is more acidic than conventional crude and therefore more corrosive, threatening the integrity of the pipelines. The oil industry disputes these claims, and neither side appears to have the high ground here. The Sierra Club and other authors of the report claim that the 218 spills/10,000 miles of pipeline in Alberta between 2002 and 2010 compare unfavorably with 13.6 spills/10,000 miles of US pipelines and are due to the corrosive nature of crude derived from the oil sands.

The US Department of Transportation is currently conducting a study on transporting Alberta’s crude to try to determine if in fact it is more dangerous to transport than conventional crude. The study was mandated by Congress in January and is due by July 2013. The study is not likely to close the book completely on the safe transportation of Alberta’s crude, but it marks the first time the subject has come under any independent scrutiny.

The “Dirty Oil Diplomacy” report is available here.

The “Tar Sands Pipelines Safety Risks” report is available here.

Paul Ausick

Oneok Partners is 43.5% owned by Oneok Inc. (NYSE: OKE), which also owns the general partner interest in Oneok Partners. Both companies have been focused on natural gas transportation and production and this marks their first foray into the crude oil transportation business.

A competing pipeline, proposed by Canada’s Enbridge Energy Partners LP (NYSE: EEP) and parent Enbridge Inc. (NYSE: ENB), would move the oil directly east out of the Bakken or north into Saskatchewan before being sent to eastern Canada or Chicago.

Neither of these plans is as grand as the 1,700-mile, 1.1 million barrel/day TransCanada Corp. (NYSE: TRP) proposal for the Keystone XL pipeline. However both follow existing rights of way and neither transports oil from Canada into the US, a major sticking point on the Keystone XL project. And the Oneok plan is the first major US pipeline to plan on hauling a substantial amount of Bakken crude to the major US trading hub.

A large map showing the route of the Oneok Partners’ Bakken Crude Express Pipeline is available here.

Paul Ausick

Tim Cook, Apple’s CEO, is in China to address production labor problems. (Reuters)

The European Union begins an investigation of the United Technologies (NYSE: UTX) bid for Goodrich (NYSE: GR). (Reuters)

Fed Chairman Bernanke says “easy money” remains necessary because of the slow jobs recovery. (WSJ)

Houston-based Enterprise Products Partners (NYSE: EPD) and Enbridge (NYSE: ENB) of Calgary plan to create a pipeline that will compete with the Keystone XL. (WSJ)

German consumer confidence slips in a recent poll by GfK. (WSJ)

Nokia (NYSE: NOK) will sell its new high-end Lumia 900 smartphone for $99.99 in the U.S. (WSJ)

Chancellor Merkel says she supports a temporary increase in European bailout funds. (WSJ)

The Federal Trade Commission will ask Congress to examine new digital privacy rules. (WSJ)

AstraZeneca (NYSE: AZN) cannot delay the distribution of generic versions of its antipsychotic drug Seroquel. (WSJ)

Banks that did poorly in recent stress tests performed by the Fed want data used to make the decisions. (WSJ)

Some states may run pension plans for companies. (NYT)

BWM recalls 1.3 million cars due to battery flaws. (NYT)

Goldman Sachs (NYSE: GS) plans to enter the electronic bond trading industry. (FT)

Google (NASDAQ: GOOG) inches closer to the release of a self-driving car. (Bloomberg)

Douglas A. McIntyre

Two major energy companies are planning to build new pipelines that will move as much as 850,000 barrels of crude oil a day from Canada to refineries along the Gulf Coast by mid-2014, in the latest effort to cope with a surge of oil production in North America.

The separate projects, planned by Houston-based Enterprise Products Partners (NYSE: EPD) and Enbridge (NYSE: ENB) of Calgary, will compete with TransCanada’s (NYSE: TRP) proposed Keystone XL pipeline, a massive project to move crude from the oil sands of Alberta to U.S. refineries.

What is not clear is how the new enterprise plans to get over the environmental objections to Keystone. The Obama Administration has blocked the construction of the northern leg of the pipeline, despite persuasive arguments that the project could push down oil prices and add tens of thousands of jobs to the U.S. economy. The answer appears to be that the new, rival pipeline will be made up of sections already approved by federal and state authorities. That may not stop environmentalists from objections that a new flow of oil will endanger regions through which the pipeline carries crude.

The Journal points out that the new pipeline does not negate the need for one that moves crude from some regions in Canada.

Douglas A. McIntyre

Another Canadian pipeline company, Enbridge Inc. (NYSE: ENB) has purchased a majority share in the existing Seaway pipeline, and the company plans to reverse the flow of crude in that pipeline to transport oil from Cushing to Port Arthur and Houston. The plan would move 150,000 barrels/day to begin with, but added compression would boost the total to 400,000 barrels/day by next year.

Enbridge has also announced plans to build a new pipeline from Flanagan, Illinois, to Cushing along the existing right-of-way of its 650-mile Spearhead pipeline. Capacity has not yet been announced, but the original plan called for a 30-inch line but that is likely to get larger as demand for transportation grows.

None of these lines is going to have much effect on gasoline prices. The purpose for building them is to move the crude from the oil sands of Alberta and the Bakken shale to the Gulf Coast, where the price of crude is much higher.

Right now crude from the oil sands and the Bakken are heavily discounted to the price of Brent — as much as $40/barrel. If that nearly-stranded crude can get to the major US refining area along the Gulf Coast, it will be worth a lot more. The Gulf Coast currently receives just over half of the 9 million barrels/day of crude that is imported into the US. Getting 1.1 million barrels/day — or potentially more — will cut down on the amount of oil imports, particularly because demand for transportation fuel in the US is stable or falling.

What happens to prices? Well, they could fall a little, but the whole purpose of the Keystone XL and the other pipelines aimed at the Gulf Coast is to increase the price of North American oil. It is true that by not exporting dollars in exchange for oil the US trade balance will improve, but an average American is not likely to see any sudden drop in pump prices.

The recent run-up in crude prices is mostly due to an improving US economy, the appearance of a solution to the Greek debt crisis, some signs that China’s economic activity will increase, and, not least, the tensions over Iran’s nuclear development program. These factors are real, but they are also temporary. Oil is, after all, just another commodity, and commodity prices react quickly to events and rumors.

Paul Ausick

The unofficial closing bells put the DJIA up nearly 46 points to 12,949.95 (0.36%), the NASDAQ fell more than 8 points (-0.27%) to 2,951.78, and the S&P 500 rose 0.23% or more than 3 points to 1,361.22.

There were several analyst upgrades and downgrades today, including Chesapeake Energy Corp. (NYSE: CHK) raised to ‘buy’ at Stifel Nicolaus; Wynn Resorts Ltd. (NYSE: WYN) reiterated as ‘outperform’ with a target price of $145 at Credit Suisse; Comcast Corp. (NASDAQ: CMCSA) cut to ‘hold’ at Argus; Ralph Lauren Corp. (NYSE: RL) raised to ‘buy’ with a price target of $202 at Argus; and Dell Inc. (NASDAQ: DELL) cut to ‘neutral’ at Baird.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Constellation Energy Group Inc. (NYSE: CEG) is down -0.38% at $36.53 (more coverage here); Enbridge Inc. (NYSE: ENB) is down -3.9% at $37.86; SunPower Corp. (NASDAQ: SPWR) is up 11.6% at $8.35 ;(more coverage here); H.J. Heinz Co. (NYSE: HNZ) is up 4.3% at $54.35; and Campbell Soup Co. (NYSE: CPB) is up 2.6% at $32.90 (more coverage here).

Other standouts from today include the following stocks:

Demand Media Inc. (NYSE: DMD) is up nearly 32% at $7.83. The Internet media company reported better-than-expected earnings last night.

Blue Dolphin Energy Co. (NASDAQ: BDCO) is up more than 25% at $10.87 after posting a new high of $11.60 earlier today. The pipeline and oil & gas producer has no news, but crude prices are rising today and Blue Dolphin is likely thought of as an acquisition target.

Cell Therapeutics Inc. (NASDAQ: CTIC) is up 23% at $1.37. The drug maker received a positive opinion for approval of its non-Hodgkin lymphoma drug from a European regulator.

Gilead Sciences Inc. (NASDAQ: GILD) is down nearly -15% at $46.74. The drug maker reported a setback on its hepatitis C trials. More coverage here and here.

Superconductor Technologies Inc. (NASDAQ: SCON) is down nearly -18% at $1.03 after posting a new 52-week low of $0.90 earlier today. The superconductor materials company completed a private placement of 4.6 million shares at $1.05/share. We have more coverage here.

US markets are closed Monday in observance of the President’s Day holiday.

Stay tuned for Tuesday. We have noted the following events on the schedule (all times Eastern):

• 11:30 a.m. – 6-month bill auction
• 1:00 p.m. – 2-year note auction

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Have a great holiday weekend.

Paul Ausick

The earnings previews are for the following: Akamai Technologies, Inc. (NASDAQ: AKAM); Atmel Corporation (NASDAQ: ATML); Cisco Systems Inc. (NASDAQ: CSCO); Computer Sciences Corporation (NYSE: CSC); Enbridge Inc. (NYSE: ENB); Groupon Inc. (NASDAQ: GRPN); Ingram Micro Inc. (NYSE: IM); IntercontinentalExchange Inc. (NYSE: ICE); Level 3 Communications Inc. (NASDAQ: LVLT); Moody’s Corporation (NYSE: MCO); News Corp. (NASDAQ: NWSA); PAA Natural Gas Storage L.P. (NYSE: PNG); Plains All American Pipeline L.P. (NYSE: PAA); Prudential Financial Inc. (NYSE: PRU); Ralph Lauren Corporation (NYSE: RL); Reynolds American Inc. (NYSE: RAI); Sprint Nextel Corporation (NYSE: S); Time Warner Inc. (NYSE: TWX); Vical Inc. (NASDAQ: VICL); Visa Inc. (NYSE: V); and Whole Foods Market Inc. (NASDAQ: WFM).

We have compiled earnings preview on each company using Thomson Reuters consensus estimates and added color on each if applicable.  Some are market moving, some are sector moving, and some are just interesting for traders to watch around the earnings reports.

Akamai Technologies, Inc. (NASDAQ: AKAM) has estimates of $0.40 EPS and $311.26 million in revenues.

Atmel Corporation (NASDAQ: ATML) has estimates of $0.09 EPS and $401.5 million in revenues.    Growth is gone, but it still screens as value.

Cisco Systems Inc. (NASDAQ: CSCO) has estimates of $0.43 EPS and $11.23 billion in revenues.  Preliminary preview notes are available.

Computer Sciences Corporation (NYSE: CSC) has estimates of $0.58 EPS and $3.98 billion in revenues.  As a reminder, CSC has warned on earnings.  This one shows up as a value stock in all sorts of investor screens but it is a value trap.

Several other standouts from today are as follows…

Zoll Medical Corp. (NASDAQ: ZOLL) is up nearly 23%, at $43.80. The medical equipment maker beat quarterly earnings estimates and announced a $50 million stock buyback program.

Angie’s List Inc. (NASDAQ: ANGI) is up more than 25%, at $16.32. The company had its IPO today, and shares have risen briskly from the $13 offering price.

Rambus Inc. (NASDAQ: RMBS) is up more than 23%, at $8.78. The company’s shares were torched yesterday following an adverse ruling in a patent case. Today’s comeback will help, though its a long ways back to the $18 level the stock was trading at yesterday morning.

Viasystems Group Inc. (NASDAQ: VIAS) is up more than 22%, at $18.25. The company withdrew a proposed offering of 4 million shares.

Daqo New Energy Corp. (NYSE: DQ) is down about -19%, at $1.82, after setting a new 52-week low earlier today. The company’s CFO will leave the company at the end of this month. Shares fell -3% early this week when the solar PV company missed earnings estimates.

Stay tuned for Friday. New York Federal Reserve Bank president William Dudley is speaking tomorrow morning and Dallas Federal Reserve Bank president Richard Fisher is speaking tomorrow afternoon. Here’s a list of other noteworthy events (all times Eastern):

• 10.00 a.m. – Conference Board index of leading economic indicators

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Paul Ausick

Valero Energy Corp. (NYSE: VLO) shares closed down more than -9% on the day. Marathon Petroleum Corp. (NYSE: MPC) closed down nearly -12%, Tesoro Corp. (NYSE: TSO) closed down nearly -10%, and Western Refining Inc. (NYSE: WNR) was off -13.5%. CVR Energy, Inc. (NYSE: CVI) shares plunged more than -16%.

The major integrated oil companies with refining operations also experienced a down day, with Exxon Mobil Corp. (NYSE: XOM) off about -1%, Conoco down about -3%, Chevron Corp. (NYSE: CVX) down about -2%, and BP plc (NYSE: BP) down about -0.5%.

All this carnage over a 150,000 barrel/day pipeline that currently carries almost no oil from the Gulf Coast to the storage tanks at Cushing, Oklahoma, and will not be reversed until sometime later next year. The US consumes about 9 million barrels/day of crude just for transportation use, so less than 2% of that crude should not have such an outsized effect on refiner stocks.

The Seaway pipeline transaction, the other 50% of which is owned by Enterprise Products Partners L.P. (NYSE: EPD), was merely the trigger. Refiners’ profits have been strong in recent months as those with access to WTI and cheaper crudes have been able to price the refined output based on Brent crude input costs. The differential once reached nearly $28/barrel. The price difference closed to about $11/barrel yesterday and is around $8/barrel this morning.

Brent prices are falling, but not as fast as WTI prices are rising. The reversal of the Seaway pipeline means that landlocked WTI can now get to the Gulf Coast refineries where it will be priced the same as Brent. As the two crude prices converge, refiners will not be able to feast off that differential.

Another factor weighing against the refiners is the start-up of the Bakken Oil Express, a tank-car train running from North Dakota to Louisiana. The first train-load of crude left North Dakota on November 7th with 70,000 barrels, with current rail capacity of 100,000 barrels/day expected to increase to 250,000 barrels/day. Rail transport of crude and refined products has risen by more than 9% in the past year, to about 7,600 tank-cars/week.

The price of Brent is falling because production from Libya has ramped quickly, to reach about 700,000 barrels/day already, more than half its total production before the upheaval of last Spring. Full production of 1.3 million barrels/day could be reached before mid-2012, again keeping downward pressure on Brent pricing.

The final factor pushing WTI prices up is the tentative agreement between TransCanada Corp. (NYSE: TRP) and the state of Nebraska on a new route for the Keystone XL pipeline from Canada to the Gulf Coast. This pipeline could carry up to 1.1 million barrels/day when (if) it is built. Because Canada’s synthetic crude is priced even lower than WTI, getting this pipeline into service is critical to oil sands producers who want to see the differential between synthetic crude and WTI/Brent close if not disappear altogether.

TransCanada has said that it is considering moving ahead with the section of the Keystone XL that runs from Cushing to the Gulf Coast and Enterprise has said that it will scrap plans for a new pipeline from Cushing to the Gulf but now plans to expand the Seaway pipeline to as much as 400,000 barrels/day by 2013. The two pipelines combined could carry nearly 1 million barrels/day from Cushing to the Gulf.

That million barrels represents crude that would not need to be imported by ship to the Gulf, but rather than lowering crude prices, it would raise them. That raises refiners’ input costs and raises the price of gasoline at the pump for consumers.

BP and Royal Dutch Shell plc (NYSE: RDS-A) probably stand to gain the most of any of the integrated oil companies from the new outlets to the Gulf. Shell is a big producer from the oil sands and BP is upgrading its refinery in Indiana to process the heavy Canadian synthetic crude, as well as owning production properties in the US midwest.

Refiners’ stocks are likely to take more losses today, though not as bad as the beating they got yesterday. Big oil companies could lose a bit more today, but the rising price for crude more than offsets any hits to their refining operations.

Paul Ausick