Crossroads Pipeline Company Index of Customers

Exhibit No. SEA-7 Page 1 of 14 STATEMENT E POTENTIAL COMPETITION FOR SEAWAY PIPELINE Exhibit No. SEA-7 Page 2 of 14 TABLE OF CONTENTS FOR STATEMENT E Section Page 1 I. INTRODUCTION ............................................................................................................................ 1 2 II. RECENT NEW ENTRY INTO THE DESTINATION AND ORIGIN MARKETS SERVED 3 BY SEAWAY PIPELINE ................................................................................................................ 1 4 A. Destination Market ................................................................................................................ 1 5 B. Origin Market ........................................................................................................................ 3 6 C. Conclusions .......................................................................................................................... 4 7 III. THE IMMEDIATE ENTRY OF EXCESS CAPACITY HELD BY OTHERS .................................... 4 8 IV. SUBSTANTIAL NEW ENTRY HAS OCCURRED IN RESPONSE TO SHARP 9 INCREASE IN NORTH AMERICAN CRUDE OIL PRODUCTION ................................................ 5 10 V. NEW PROJECTS THAT WILL INCREASE COMPETITION IN THE CUSHING ORIGIN 11 MARKET AND GULF COAST DESTINATION MARKET IN THE FUTURE ................................ 5 12 A. Sunoco Logistics Permian Express 2 ................................................................................... 5 13 B. Plains Cactus Pipeline .......................................................................................................... 6 14 C. Blueknight Knight Warrior Pipeline ....................................................................................... 8 15 D. Sunoco Logistics Permian Longview and Louisiana Extension ........................................... 9 16 E. Plains All American Diamond Pipeline ............................................................................... 10 17 VI. THE POTENTIAL FOR ADDITIONAL RAIL ENTRY .................................................................. 11 18 E-i Exhibit No. SEA-7 Page 3 of 14 STATEMENT E POTENTIAL COMPETITION FOR SEAWAY PIPELINE 1 I. Introduction 2 Evidence of potential competition in Seaway Pipelines destination and origin 3 markets appears in the form of recent new entry and excess supply capacity held by 4 others. There has been substantial recent new entry into the destination and origin 5 markets served by Seaway Pipeline. This recent new entry demonstrates that there are 6 no serious barriers to entry. Therefore, potential new entry functions as a very real 7 constraint on Seaway Pipelines behavior. 8 Crude oil production in North America has increased dramatically over the last 9 several years and is expected to continue increasing. The areas where major increases 10 have occurred include: (1) the Western Canadian oil sands; (2) the Bakken oil shale 11 area in North Dakota; (3) the Niobrara oil shale area in Northeastern Color