2019 Canadian Oil Pipeline Report: Supply Outpaces Pipeline Capacity

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Western Canada’s oil supply is 365,000 barrels above the amount of oil flowing daily in existing pipelines, according to a report on Western Canadian Crude Oil Supply, Markets, and Pipeline Capacity released in December by the National Energy Board (NEB).

Meanwhile, the NEB has approved a request by TransCanada’s Keystone Pipeline GP Ltd. to begin winter clearing work on the North Spread of its Keystone XL project, starting at Hardisty, Alberta, according to a Jan. 21 announcement.

The NEB’s approval applies to the North Spread of the project only. Clearing activities in other areas of the project, other construction activities and any activity during the restricted activity periods for migratory birds are excluded from this approval. Further pipeline construction would be subject to NEB approval of other condition compliance submissions.

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The Canadian portion of the pipeline would traverse 529 km from Hardisty, Alberta, crossing the Canada-U.S. border at Monchy, Saskatchewan. The company has completed oil tank construction at the Hardisty Terminal in Alberta, and completed two horizontal directional drill crossings of the Red Deer River and South Saskatchewan River. Work is also ongoing at several pump stations.

However, Keystone XL has run into another setback on the U.S. side after a U.S. District Court Judge Brian Morris ruled that TransCanada can’t move forward with work to prepare for construction, such as setting up camps for workers who would build the pipeline if the project is allowed to move forward. The judge said TransCanada can move pipe to storage yards along the pipeline route. The decision could prevent TransCanada from beginning construction on the pipeline this year, and may push its earliest start date to 2020.

The Trans Mountain Expansion Project took another step forward on Feb. 22, when the NEB recommended that the project is in the Canadian public interest. The NEB will impose 156 conditions on the project if it is approved, and has made 16 new recommendations to the government of Canada.

The recommendations relate to matters that fall outside of the NEB’s regulatory mandate, but within the authority of the Canadian government, including emergency preparedness and response, protection of the environment, consultation with affected Indigenous communities, socio-economic matters, pipeline safety and integrity, commercial support for the project prior to construction and financial responsibility on the part of the company.

Additional crude oil pipeline projects remain in the works as the construction season is around the corner. What follows are highlights regarding projects to expand Canada’s crude oil transportation infrastructure that are under way, awaiting regulatory approval or still in the planning stages.

Heartland Pipeline

Location: Alberta
Stakeholder(s): TransCanada
Overview: The Heartland Pipeline is a proposed 125-mile pipeline that will transport crude oil from the Edmonton region to facilities near Hardisty in Alberta. Once in operation, it will have the capacity to transport upwards of 900,000 barrels per day (bpd) of crude oil and will play a key role in connecting Canadian crude oil supplies in Alberta directly to markets. On May 7, 2015, the Alberta Energy Regulator (AER) approved the project. However, since receiving this approval, development has been delayed. As a result of this delay, the AER granted Heartland a three-year license extension. On Jan. 25, Heartland submitted another request to the AER for an additional one-year extension. That application was approved on Feb. 4.

Keystone XL Pipeline

Location: Alberta to U.S. Midwest and Southeast
Stakeholder(s): TransCanada
Overview: The long-delayed Keystone XL pipeline project is a proposed 1,179-mile, 36-in. diameter crude oil pipeline from Hardisty, Alberta, to Steele City, Nebraska. At an estimated cost of $5.3 billion (USD), the pipeline will transport crude oil from Canada, as well as the Bakken shale region of Montana and North Dakota. The pipeline will have capacity to transport 830,000 bpd to Gulf Coast and Midwest refineries. In November 2017, the Nebraska Public Service Commission approved Keystone XL. The NEB approved clearing work in January on the North Spread, starting in Hardesty. However, a U.S. District Court judge ruled in February that TransCanada could not begin preparations for construction in Montana.

Keystone XL Pipeline

Location: Alberta to U.S. Midwest and Southeast
Stakeholder(s): TransCanada
Overview: The long-delayed Keystone XL pipeline project is a proposed 1,179-mile, 36-in. diameter crude oil pipeline from Hardisty, Alberta, to Steele City, Nebraska. At an estimated cost of $5.3 billion (USD), the pipeline will transport crude oil from Canada, as well as the Bakken shale region of Montana and North Dakota. The pipeline will have capacity to transport 830,000 bpd to Gulf Coast and Midwest refineries. In November 2017, the Nebraska Public Service Commission approved Keystone XL. The NEB approved clearing work in January on the North Spread, starting in Hardesty. However, a U.S. District Court judge ruled in February that TransCanada could not begin preparations for construction in Montana.

Line 3 Replacement

Location: Alberta, Saskatchewan, Manitoba
Stakeholder(s): Enbridge
Overview: Enbridge’s proposed Line 3 Replacement Program involves replacement of all remaining segments of its Line 3 pipeline between Hardisty, Alberta, and Superior, Wisconsin, along with construction of associated facilities. The project involves replacing existing 34-in. diameter pipe with 36-in. diameter pipe from Hardisty to Gretna, Manitoba, and Neche, North Dakota, to Superior. Segments of Line 3 from the U.S.-Canada international border to Neche, and near the Minnesota-Wisconsin border to Enbridge’s Superior Terminal, will be replaced with 34-in. diameter pipeline, and are under separate segment replacement projects. The Canadian government approved the project in November 2016. Upon completion, the pipeline is expected to have an initial capacity of 760,000 bpd and is expected to cost $5.3 billion (CAD). Enbridge announced on Feb. 15 that construction is nearing completion in Canada. With key approvals received from the Minnesota Public Utilities Commission (MPUC), the company has moved into the permitting phase of the project in Minnesota. Enbridge expects to bring the full project into service before the end of 2019.

Trans Mountain Pipeline Expansion Project

Location: Alberta, British Columbia
Stakeholder(s): Canadian Government
Overview: For more than 60 years, the Trans Mountain Pipeline system has been providing the only West Coast pipeline access for Canadian oil products. From the time when Trans Mountain was first constructed in 1953, the pipeline system has adapted to meet the growing needs of customers. The pipeline system was most recently expanded in 2008 as part of the Anchor Loop Project. Approximately 158 km of pipeline was twinned between Hinton, Alberta, and Hargreaves, British Columbia. Now, the company is proposing a $5.4 billion expansion of its current 1,150-km pipeline between Strathcona County, Alberta (near Edmonton), and Burnaby, British Columbia. The proposed expansion would create a twinned pipeline that would increase the nominal capacity of the system from 300,000 bpd to 890,000 bpd. The Canadian federal government acquired the Trans Mountain from Kinder Morgan in August 2018 for $4.5 billion (CAD). The Federal Court of Appeal subsequently reversed the governments approval of the project, which had to reapply for approval. The NEB recommended that the project is in the Canadian public interest on Feb. 22, placing the project back before the Canadian government for final approval.

This is not a comprehensive list of the oil pipeline projects in Canada. For more information about these and other projects, you can visit the NEB website at neb-one.gc.ca or the AER site at aer.ca.

North American Oil & Gas Pipelines provides quarterly updates of oil and gas pipeline projects in the United States in Canada. The next update will be May, covering U.S. oil pipeline projects.

Bradley Kramer is managing editor of North American Oil & Gas Pipelines. Contact him at bkramer@benjaminmedia.com.

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